Financial meltdown's local impact not uniform: Money expected to be there for area farmers, college students

Oct 03, 2008 (American News - McClatchy-Tribune Information Services via COMTEX) -- WFC | Quote | Chart | News | PowerRating -- As area farmers start to think about borrowing money to put in 2009 crops, one of their main sources of loans could fulfill its calling like never before as the nation's financial crisis plays out.

Farm Credit Services of America, which operates in the area, is chartered by Congress to make sure the ag industry can access loans in times like these.

"This could be the very thing we are charged to respond to," Craig Kinnison, chief financial officer for the multi-state organization told the American News on Thursday. "We will be there through thick and thin. Our mission is to provide a safe, sound and dependable source of credit. That's why we're here."

The financial crisis has created uncertainty about obtaining loans, and not just among farmers. FSCA is in better shape than a lot of lenders because of its secure sources of capital, Kinnison said.

FSCA operates in South Dakota, Iowa, Nebraska and Wyoming. It is one of 95 such organizations charged by Congress to make sure the ag industry has access to capital.

The organization has 30 percent to 40 percent of the market share of ag loans, Kinnison said. If other sources of ag loans become unavailable, FSCA could handle a greater share of the market, he said.

"We are very well capitalized to meet the needs of the four states," he said.

That's not to say he or anyone expects or wants other sources of ag loans to disappear.

"We want the competition," Kinnison said.

But in a worst-case scenario, "If we are the only game in town, at least there is a game."

Banking concerns: Banking customers who are worried about their finances in the midst of the economic crisis should set up an appointment with their banker, a local official said Thursday.

Daryl Eubach, community banking president at Wells Fargo in Aberdeen, said the main question customers want to know is whether their money is safe.

"I would say, at Wells Fargo, their deposits are safe and secure," Eubach said. "...People have questions, and it's not uncommon. We can't listen to any TV or radio station without hearing about what's going on. I would tell people to visit with their banker. There's not a one-size-fits-all decision for everyone."

While the economic crisis has already affected the banking industry, it might be too soon to tell how it will affect its customers, Eubach and Kelly Sprecher, a Wells Fargo spokeswoman, said.

When it comes to loans and the ability to secure lines of credit, each person and business will be different, she said.

"It's definitely going to vary," Sprecher said. "It will depend on which (customer) it is and what bank it is. Every bank structures things differently."

The mission, at least at Wells Fargo, will remain the same, Eubach said.

"Our mission is to help our customers succeed financially," he said. "...The industry that we're in, the financial industry, is going through some very hard times right now. We'll continue to lend responsibly."

College concerns: Area college students and those who will be start college in fall 2009 can be confident that federally backed student loans will be available for the 2009-10 school year.

That was the word Thursday from Clark Wold, president of the Education Assistance Corp.

The student loan industry was already in trouble this past spring, when Congress passed an emergency measure to make sure lenders had access to capital to loan to college students for the current school year.

The emergency measure was set to expire Sept. 30. But in light of all the financial uncertainty now, Congress recently extended the expiration date to Sept. 30, 2010, Wold said.

"That is gratifying," he said. "It confirms that Congress understands the critical nature of funding for student loans. Congress knows we need a vibrant higher education system."

The extension means federally backed student loans will be available for the 2009-10 school year. And now is the time when college students and high school seniors start lining up finances for the next year of college.

"All things considered, we are in pretty darn good shape," Wold said.

At least as far as government student loans go. Some students borrow from private sources as well.

"There's less certainty about the private loan side," Wold said.

K-12: The Aberdeen school district's reserves are immune from stock market swings because all the money is in certificates of deposits and government-backed securities, said Tom Janish, the district's finance director.

"State law restricts what we put our money into," he said. Districts can't put money in stock markets.

The district has reserves because most tax collections arrive in lump sums twice a year -- in greater amounts than the district spends immediately. Reserves typically are lowest just before another large sum of tax money arrives.

There's always the possibility that reserves might run out before the next large sum shows up, in which case the district might have to borrow to meet payroll. But that has not happened, at least for 20 years.

School staff also received e-mails this week from a South Dakota Retirement System official indicating that its funds are secure because they are largely immune to stock market fluctuations. Aberdeen public school employees are part of the state retirement plan.

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