Consumers and investors are anxious about the economy and the stock market, but loans are still being made and return on investment is still possible at Colorado banks, says the president of the Colorado Bankers Association.

“Public perception is that there isn’t any credit available,” said CBA President Don Childears, “but banks chartered and headquartered in Colorado increased the amount of loans on books 11.7 percent year-end ’08 over year-end ’07.”

Nationally, bank loans declined 0.4 percent during the same period.

Colorado banks are healthy and lending is up – but only for consumers with great credit, who qualify for “gold-plated” loans, as Childears calls them.

Nonbank financial institutions normally comprise 70 percent of national lending. Because “nonbanks are practically gone,” Childears said, banks, which account for only 30 percent of lending, cannot possibly make up the difference.

And the Feds and the Treasury tell banks to lend, but the bank regulatory agencies send a conflicting message: don’t make any loans except the “really solid” ones.
“So parts of the government have a foot on the accelerator, and parts have a foot on the brake,” Childears said.

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“But good borrowers can still get credit from local banks.”

As for the multi-faceted Troubled Assets Relief Program, only two banks – Citibank and Bank of America – received “extraordinary assistance” in the form of enormous loans guarantees. And under the Capital Purchase Program portion of TARP, which was for healthy banks, “less than 5 percent of all banks received this,” Childears said. Some of them were “forced” to take it, and most banks are trying to “get the money back to the government as soon as possible.”