October 17, 2008

Conrad, Pomeroy talk about economic bail out

Conrad, Pomeroy talk about economic bail out

As Sen. Kent Conrad, D-N.D., was describing the economic bailout plan to 20 community leaders in Stanley Thursday, he suddenly paused and stared at the floor for a few moments. The stock market had just taken another tumble with the Dow losing more than 600 points that day.

Last week turned out to be the worst on Wall Street since the stock market crashed on Oct. 29, 1929 and although the market has begun to rebound, Conrad said we may still be in for a rough ride.

"You just delivered some very bad news," Conrad told his aide. "In June the Royal Bank of Scotland predicted a crash by fall. The great unknown is this economy is heading away from us so fast we won’t be able to catch up. We’ve got to do what we can to keep this from turning into a collapse."

Conrad called the crisis "a contagion" that has spread throughout Canada, Europe and Asia. He said dozens of banks in Europe including larger institutions in England and Iceland, have failed, or would have failed had the federal governments in those countries not stepped in with massive monetary injections to keep them afloat.

Here at home, we’re relatively shielded from the international crisis, but numerous concerns remain, primarily with 401K investments losing value.

But the banks are solid, according to Conrad, from the Bank of North Dakota on down to the smallest branch bank in the state.

"Our banking situation is sound, strong and secure," Conrad said. "But we’re not an island by ourselves."

Lakeside State Bank President Gary Peterson, New Town, backed up Conrad’s analysis of North Dakota’s banking industry.

Peterson said Lakeside is having a very profitable year primarily because New Town is in a pocket of a vibrant situation.

"In this area there is very little impact on our Main Street," Peterson said. "Most banks in North Dakota are in very good shape with good capital and a good credit situation. To my knowledge, banks in North Dakota are in good shape."

Peterson said there is concern about retirement accounts that have dwindled, but he said unlike 1929, commercial banks are the safest place to keep money because of the Federal Deposit Insurance Corp., guarantee that has now risen from $100,000 to $250,000 since the economic bailout was passed.

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