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The Unknown

by Mark Singleton


None of us can predict what tomorrow will bring in regard to the economy.  No one.  

We can see all sorts of indicators that tell us the economic crisis is flattening out which historically means the beginning of a recovery.  However, in the past, those who have taken the high road of optimism have sometimes driven believers right off the cliff.

Although we may see a ray of sunshine these days, that doesn’t mean the rainbow ends at a pot of gold.  We cannot return to the days where a bright economy is blinded by greed.   There still remains too many “what-ifs” to absolutely know what to do.

In the book “The Coming Generational Storm,” the authors contend that the U.S. economy is not nearly in the critical state that is being felt in Argentina, Japan, France, Germany, Italy, Spain and other countries throughout the world.  If one or more of those countries collapses it would be an economic disaster for the U.S. stretching all the way to Ellis County. 

What happens, God forbid, if enemies of the U.S. capitalize on our weak economy and initiate a terrorist attack?  We know from 9/11 that the economy goes into a tailspin. 

What if gas pump prices spike again and reach $5.00 a gallon, or the anticipated downfall with credit card companies occurs, or the stimulus package stimulates high inflation. 

No banker has a crystal ball that foretells the future.  However, I remain  optimistic because I strongly believe in the tenacity of Texans.  We are time-tested-tough, not because we are Pollyannas, but because we crushed Santa Anna and established a heritage, as Sam Houston said:  “Texas has yet to learn submission to any oppression.”

We are fighters and there is still plenty of fighting left to do.

On May 4th the Federal Reserve is going to release the results of the “stress test” evaluation it is formulating on the 19 U.S. financial institutions with assets of at least $100 billion dollars.   Those banks, insurers, brokerages and regional banks represent more than 80% of all the loans in financial institutions in the United States.  You don’t need to be a wizard to understand the news won’t be pretty.  It is estimated that the losses could be almost 3 trillion dollars.  That’s TRILLION dollars!

The Fed’s recovery blueprint derived from the “stress test” results will affect us in Ellis County.  The big, national and regional banks in our area will be placed under stricter guidelines.  The smaller, independent banks will remain conservative.   So, how in the world can you draw any optimism from that dose of reality?

First, loose lending helped get the United States in the mess it is in.  To demand stricter guidelines on who, what, when, where, why and how loans will be made in the future is a positive step.  Money will not dry up, it just won’t be overflowing.

People and businesses will still be able to get mortgages, personal loans and commercial lending, but the criteria will be ratcheted up some notches.  That’s the way it should be.  

Second, credit cards companies will be placed under the microscope and the noose on loose credit standards will be tightened.  It’s time we got back to the days that if you can’t afford something, you shouldn’t buy it.

Third, the good bankers will survive and the bad bankers will be banished.  That is good for the industry.  That is good for you.

Fourth, and probably most important in regard to how the new age of grassroots economics is going to be affected in a positive way, you and your neighbors are darn tired of this rubbish and you are not going to take it anymore.   It takes people to yell STOP before they can go in new directions.  And, it is happening everywhere you turn.

Gas prices were too high, people stopped driving as much, prices went down.  Home costs began to build, people got hammered, sales fell.  The cost of airline travel skyrocketed, people stayed home, and now a roundtrip ticket to London is less than $500.

When people thought the dairies were milking them, sales dropped along with prices.  Economists call it supply and demand, we call it “sick and tired,” and it works.

Good bankers see all this change happening around them and adjust to meet the needs of their customers.   We are not part of the problem that the 19 “stress test” financial institutions got us into, but we darn well plan to be part of the solution. 

And, so will you.  It’s already started. 


Mark Singleton is the President and CEO of Citizens National Bank of Texas.  This column is the fourth in a series that examines what banks, businesses and the general public in Ellis County can do to combat the current tough economic times.