By Bill Kirk
bkirk@eagletribune.com
October 02, 2008 12:15 am As the stock market continues its roller coaster ride, and the economy shows other signs of weakness, a lot of people are wondering where to put their money these days. "I worry a little that the whole thing could collapse," said Scott Frisco, who runs a tile business in Bradford. "I wonder if I should have some cash stashed somewhere." The best bet, say local bankers, is a bank branch near you. They say their institutions are safe and sound; that for the most part they haven't given out bad loans and are not exposed to the subprime mortgages that are weighing down the larger banks and investment firms. Most important, Massachusetts banks, and even some doing business in New Hampshire, insure all of their deposits. Nonetheless, people are worried. "We are getting some questions," said Peter Matthews, CEO and president of the Merrimack Valley Federal Credit Union, noting that some people are asking if their money is safe. He said that every account in the credit union is insured up to $100,000 by the National Credit Union Association, and that retirement accounts are covered up to $250,000. That could go up as part of a bailout package being debated in Congress. Monday, the U.S. House killed a bailout package that would have spent $700 billion in taxpayers' money to buy bad mortgages from banks and other financial institutions then sell them back into the system once the economy turned around. "We're in an unprecedented time," Matthews said. "But at end of the day, you're better off with your money here than putting it in the mattress." John Meserve, president of Merrimac Savings Bank, which has branches in New Hampshire, said that his bank, like many others doing business in Massachusetts, offer two levels of insurance so that even deposits over $100,000 are covered. The bank has coverage through both FDIC (Federal Deposit Insurance Corp.) and DIF (Depositors Insurance Fund). "Our deposits are fully covered," he said. "We promote that as a safety element." Harold Otto, president of the Methuen Cooperative Bank, said that his bank insures depositors through both the FDIC and the Share Insurance Fund. He said FDIC covers the first $100,000, and Share covers deposits over that. "Most of our customers know we have 100 percent insurance," he said. Peter Conrad, an executive with the Cooperative Central Bank, which runs the Share insurance program for the 61 cooperative banks in Massachusetts, said the state is uniquely positioned to offer extra insurance. A 1932 law established by the Legislature created the Share program. The FDIC program came later, offering additional insurance to cooperative bank customers. And the DIF program was added to protect savings bank customers. As a result, Massachusetts is the only state offering extra coverage. Earlier this year, in fact, several stories were published in the national media about the program, and Conrad was getting calls from people all over the country looking to deposit their money into Massachusetts banks. Nonetheless, people are still nervous about their money. "People who are old enough to remember the Depression are scared," said Conrad, who noted that many local bankers have had to explain to depositors recently that their accounts are safe and secure. Meanwhile, local banks say that for the most part, their balance sheets are solid because they haven't been involved in subprime lending, only loaning money to people who qualified for it. "We are lending to our members who request it and are credit worthy," Matthews said. "And we'll continue to lend. We're just not seeing the volume of requests for car loans or mortgages as in the past. But we approve them where appropriate." "We stayed within our mission," said Otto, of the Methuen Cooperative Bank. "If you qualify, you get a loan." "We have no bad loans to speak of," said Gerry Mulligan, president and CEO of Riverbank. "We are healthy and earning well." "Our core earnings are robust," Meserve said, adding that community banks "didn't get us into this problem. We didn't do the crazy products you see out there. We paid attention to detail, and it's paying off for us right now."
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