Community economic forum held at Plumas Bank
October 24, 2008
In an effort to set the current economic record straight, Plumas Bank in Truckee hosted a community economic forum to answer questions and give advice on how to manage money in the face of what speakers called a media-induced panic.
“All the people are getting is sound bites from the television,” said Stefan Murphy, Vice President in charge of Investment Services. “They aren’t getting in depth information or a consistent impression about the economy.”
One of the main concerns people had at the forum was making sure their money is safe with banks. With national banks making headlines for the worst reasons, many seem to have lost confidence in financial institutions.
“Eight-seven percent of banks in trouble will recover” said B.J. North, Executive Vice President in charge of Retail Banking. “The number of banks that will fail is very small.”
Despite public comment returning to the problems of banks like Washington Mutual and Wachovia, Plumas representatives stressed the role of community banks in local economies.
“Community banks are not involved in high risk economic environments,” said North, “we’re face to face with the community and customers in a way the national banks are not.”
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One of the more reassuring discussions about bank security revolved around the Federal Deposit Insurance Corporation guidelines and how they have recently been changed.
While the FDIC had previously insured customer funds up to $100,000, they have temporarily increased the insured limit to $250,000 to help restore confidence in the banking system.
The FDIC has also raised the insurance level on non-interest-bearing checking accounts, a relief to many of the small business owners at the forum. From now to Dec. 31, 2009, non-interest bearing checking accounts used by many small businesses carry unlimited insurance in FDIC insured banks.
After discussing the safety of clients’ money already in the banks, the topic switched to the bank’s role as a lender.
“We have plenty of money to lend,” said Chief Credit Officer Bob Herr. “We haven’t changed the requirements, people just aren’t able to meet them now.”
With comments on the difficulty people have paying mortgages and small business loans, Herr reiterated the importance of community banks, what had become the theme of the night.
“We encourage businesses to stick out the hard times,” said Herr, emphasizing Plumas Bank’s ability to maintain a dialogue with loan customers. Herr later mentioned a day trip he took to Santa Barbara to work with a customer who had loan trouble, an example of community bank commitment.
The final subject discussed at the forum was one the Plumas representatives felt people were most misinformed about, the stock market.
Bewildered by the emotional responses clients had to television personalities warning people to get out of the market, Stefan Murphy, Vice President in charge of Investment Services, had a warning of his own, “Stick with your plan!”
Murphy’s main gripe with the media was their lack of foresight and the audience they address. While he said most people have investments designed for long-term goals like retirement or paying for a child’s college tuition, the information currently out there is obsessed with the short term and should only concern day traders who play the market.
“As an investment advisor I don’t care what the market does day to day and neither should a long-term investor,” said Murphy.
Receiving a flood of calls from emotional investors looking to dump entire portfolios following Mad Money host Jim Cramer’s recent “Sell everything” warning on the Today Show, Murphy’s advice to everyone is, “If you have an investment plan, stick to the plan; if you don’t have a plan, get a plan!”
Despite market volatility, Murphy believes this is a great time to invest for the long term. Citing Warren Buffet’s Oct. 16 Op-Ed piece in the New York Times, Murphy believes an investor should “be fearful when others are greedy and be greedy when others are fearful.”
With all the numbers, advice, and economic acronyms thrown out by the Plumas Bank panel throughout the night, community members seem to have confidence in their local banks.
“It is very helpful to get information from a community bank versus a large institution,” said Steve Lieberman of Porter Simon law firm Partner.
Worried about baby boomers approaching retirement, Truckee Tax Pros owner Diane Hughey said, “The ‘Wells-Fargos’ of the nation are going to be buried. The smaller banks that haven’t over extended themselves stand a chance.”
The economic forum was part of an ongoing effort by Plumas Bank to inform community members about the state of the economy and the role of local banks.
Similar forums have been held at Plumas Bank branches in Portola and Susanville while more are scheduled in Quincy and Chester. Those who are not customers with Plumas Bank are encouraged to be a part of the discussion as much as those who are customers.