S.C. banks are safe and sound

Everyone knows fear can make a person do strange things. Watching the Dow Jones industrial average plunge 777 points in one day last week was enough to set anyone's nerves on edge.

Amid the financial and political fallout, one thing to understand: South Carolina banks are safe and sound and are still the best place for your financial needs.

With every passing news report, we wonder how closely we, the citizens of a small Southern state with our Main Street businesses and busy lives, are linked to Wall Street's catastrophes.

Well, we are close to crisis levels, but your deposits in commercial banks are more secure than some in the media would have you believe.

In that spirit, I would like to offer you facts about the state of our state's banking system:

-- The vast majority of America's and South Carolina's banks are highly capitalized. That means the industry has a cushion of about $1.3 trillion that is a backstop against possible losses, making the possibility of anyone's bank being taken over remote.

-- Your bank deposits are FDIC-insured for $250,000, and there are legal and safe ways to get even more FDIC coverage depending on how you set up your accounts. No FDIC-insured depositor has ever lost a penny.

-- Banks pay premiums to provide FDIC insurance for their customers. The fund that guarantees bank customers' deposits is completely 100-percent funded by private banks — not by the government and not by taxpayers.

-- Most of the turmoil involves large institutions (Fannie Mae, Freddie Mac, Lehman Brothers, AIG), which are not banks. And while Washington Mutual, which was recently acquired by JP Morgan Chase, was a bank, the transaction was seamless and all deposits were protected — even amounts above the $250,000 FDIC limit.

American commercial banks are among the most highly regulated in the world. The current crisis should force reforms on the less-regulated mortgage brokers and on Wall Street. The South Carolina Bankers Association will push for that, and you should insist on it, too.

If you have questions, ask your banker. Many S.C. institutions have been around since before the Great Depression and have witnessed Americans' resiliency.

In crises, Americans pull together. We've been through tough times before, and we'll get through again.

LLOYD I. HENDRICKS

President and CEO

S.C. Bankers Association

Columbia