Louisiana Bankers Association CEO Bob Taylor told the Press Club of Baton Rouge yesterday that Louisiana banking is “strong and safe,” noting the distinction between the financial situations nationally and in the state. “AIG is not a bank. Bear Stearns is not a bank. Lehmann Brothers is not a bank. Louisiana banks are healthy, both financially and through sound management. If you are credit-worthy, the credit is available,” Taylor said.
Taylor explained that the financial situation in Louisiana is “countercyclical” to what is happening nationwide. For the most part, Louisiana lenders have not participated in the high-risk loan writing that has been a factor in the national financial situation. Because of that, Louisiana is ranked 41st in the nation in foreclosures. “It’s good to be on the bottom of those lists,” Taylor said.
Louisiana Realtors CEO Malcolm Young echoed Taylor's optimism concerning the impact of the national financial crisis on Louisiana.
“Other housing markets in the nation are in decline due to unsecured loans, but Louisiana’s market is stable," Young said. "Louisiana did not have the same aggressive home development and high-risk loans as some other states, our mortgage lending laws have ample consumer protection, and we’re still utilizing dedicated hurricane-relief funds from Congress for rebuilding."
Continued Taylor: “Many people in banking now cut their teeth during the late 1980s and early 1990s oil bust. They know what it’s like to go through tough times. That means very seasoned managers are running banks in the state." Banks and thrifts insured by the FDIC are highly regulated, and have had tighter restrictions put in place over the last seven years. Banks are now required to carry FDIC insurance on $250,000 per account, a substantial increase from the previous $100,000 required.
“Due to the national situation, there will be increased regulatory oversight, and there will be more scrutiny – and that’s a good thing,” Taylor said.