With rumors of a recession swirling on the national front, Utah’s economy is in a unique situation. Our panel of experts suggest that the fall of the real estate markets and lull on Wall Street are part of a normal cycle. A diverse economy and relatively strong real estate picture should insulate Utah from the major pains faced elsewhere in the country. The panel also discussed trends in regulation and the range of mortgage products, among other topics. Please note: The roundtable took place at the end of January. There have since been national changes that were unknown during our discussion.
We’d like to give a special thank you to Hal Heaton, professor of finance at Brigham Young University, for moderating the discussion and Holland & Hart for hosing the event.
Back Row: Howard Headlee, Utah Bankers Association; Kelly Matthews, Wells Fargo; Damon Miller, US Bank; Matt Packard, Central Bank; Jeff Thredgold, Zions Bank; Edward Leary, Utah Department of Financial Institutions; Hal Heaton, Brigham Young University; Jim Anderson, Bank of Utah
Front Row: Frank Pignanelli, Association of Financial Institutions; Richard Beard, Bank of American Fork; Jill Taylor, Key Bank; Dave Brown, First Utah Bank; Scott Davis, Mountain West Small Business Finance; Curtis Taylor, Heber Valley National Bank; Robin Martinez Bishop, JP Morgan Chase
What is the state of the economy? How does the state’s economy compare with the nation? It seems a lot of people are saying the state is a little bit insulated in that respect.
BEARD: I think you have to look at it historically. We are a capitalistic country, and capitalism allows markets to go up and down. That’s exactly what is happening. Capitalism is efficient, but it is ruthless. So when things are out of whack, it will correct them. And that’s what we are in right now. We have things that were out of whack, and the economy is going to come back into line, and it will happen with some pain. But this is a business fluctuation that you don’t need to look at as some cataclysmic event. It’s part of what capitalism does to correct things that are inefficient or wrong in the system.
MATTHEWS: The good news is that we continue to have very low interest rates as measured by the treasury rates or the short-term interest rates. Actually, the productivity side of our economy continues to be pretty good, and we are doing even better in relation to our international situation.
What we have facing us in the nation right now is that to some degree the financial industry generated this whole mess out of inappropriate concern regarding the pricing of risk. We simply got carried away in creating AAA rated mortgage-backed securities out of basically nothing more than junk mortgages. In the end, it just came unglued. I don’t think anybody, even as recently as a few months ago, had any idea how big it might be. But now we are looking at hundreds of billions of dollars of loss. Some executives of some of the biggest financial companies in our nation have lost their jobs. But I think that some of the underlying traditional measurements of economic health are still in pretty good shape, even though we have to get through this situation.
BROWN: Don’t you think there was a little bit of greed on the part of those buying those instruments for high yields and not recognizing the real risk underlying those securities they were purchasing?
MATTHEWS: Absolutely. We could make a list of greed, or just pure stupidity. It’s unbelievable because those people on Wall Street are supposedly the smartest people of all. And not only are they the ones who did it, they created it. To think that it could work forever is beyond belief. But obviously the laws of economics eventually catch up, and if you are doing irrational things, eventually you’ll have to pay for it.
THREDGOLD: A recent survey of 15 economists has the opinion split 50/50 regarding whether we are either in or about to go into a recession. We have raised our odds from about 30 percent three months ago to about 45 percent now. The case we made is that, considering the national media discussions about how bad housing is, housing is only about 5 percent of the economy. Exports are nearly 12 percent of the American economy. Housing is weak, but exports are strong. Third quarter of last year they were 16 percent ahead of the third quarter of the year before. So there’s a chance, given Fed rate cuts and whatever may come in terms of fiscal stimulus, we may still escape by the skin of our teeth.
The national media has made the housing issue much worse than it is. If you looked at the numbers a few days ago, existing home sales were down 13 percent in 2007 versus 2006. Everybody talks about a plunge. Existing homes sales in 2007 were the fifth best year ever. New home sales were the fifth best year ever, just not as strong as the prior four years.
We do this every 10 years. Step back to 1987. We have the crash of ‘87, the Dow falls 22 percent-plus in one day; the world is coming to an end. Well, the Dow is six times higher than it was at that point. Step forward 10 years. We have the Asian financial crisis of ‘97, followed by the Russian default in early ‘98, followed by the collapse of long-term capital management. And 10 years later here we are. And 10 years from now, we will be dealing with something else.
What does this mean to business owners?
ANDERSON: We have experienced a slowdown, and the economy has been overheated in Utah for at least three years. So we are in a situation now where it will be closer to normal. Our businesses and our customers are still doing very well. There’s a lot of business to do. It has slowed down a little bit, but the feeling I have in talking to our people is that ‘08 is going to be a pretty good year. Our mortgage lending is actually up. Maybe there are a fewer players in the market, but there are still people buying houses. The whole world hasn’t stopped. We still feel fairly confident that ‘08 isn’t going to fall off a cliff.
MILLER: One of the main messages we are trying to get out as a company is the simple one that we very much still have an “open for business” sign above all of our branches and banks. We do think that now is a time when financial institutions get more cautious, and we are not immune to that. We are looking for loans across the board. We are very active in the mortgage business because we weren’t really hurt by the public prime problems to a large degree, and we still have a public prime product we offer.
Subprime is still viable. Even though it got bad press, there are people who need loans. It makes sense to give them a loan. They don’t have 650 credit scores, but they may have jobs, need homes, and there’s a way to do that. I still think that this year will be an OK year. I don’t think it is going to be a record-breaking year by any stretch of the imagination, but it should be a solid year, especially here in Utah.
Have you changed lending standards at all during the last six months?
MILLER: No. None of our ratios or hurdles have changed. We may have eliminated a few products along the subprime line that don’t make sense anymore, but in terms of changing standards, we haven’t. We are still looking at deals the same way. That said, there clearly is an element of conservatism that comes into play in a time like this.
THREDGOLD: The recent developments in the economy mean business owners will see short-term rates that have come down 1.75 percent. They will probably come down another half percent soon. Mortgage rates are at a two and a half year low. You’ve got a stimulus package that is probably going to be around $200 billion. When I look at the stimulus package that is likely to emerge once the Senate gets its input, potentially the most important thing is the fact that you may get conforming mortgages with a limit that goes from $417,000 up to something above $700,000. That would be a Godsend to this market that has too many half million dollar and above homes for sale. Suddenly you can do a government-backed, government-guaranteed mortgage at a traditional rate, not a jumbo rate where the spreads are wide. So $600 rebate checks are one thing, but the ability to provide some real support to the mortgage market is what is important in the program.
PACKARD: You have to assume that real estate is going to take some time, but most people want instant correction to the market. As you deal with an oversupply of lots and oversupply of homes on the market, it is going to take some time through ‘08 and part of ‘09 to digest that, whether it’s a foreclosure or an over-inventory. As far as the health of the underpinning of the economy, I think it is still very strong. From our standpoint, we are seeing weakness in things but we are certainly not seeing what happened during the early ‘80s where there were some real crises going on.
Let’s turn from the consumer to the business and commercial real estate side. Are you seeing slow-downs or changes in business lending and commercial real estate?
ANDERSON: Our commercial real estate construction lending is as high as it has ever been. Mostly owner occupied. We don’t do a lot of spec projects.
MATTHEWS: There’s probably no doubt that there has been some reconsideration and evaluation of risk parameters in terms of this type of lending. The underlying reality is that the rental rates, the occupancy, the entire economic structure of commercial real estate is basically as good as it could possibly be. The prospect is if we just build all the stuff that’s been announced, it’s going to be a continued aggressive amount of growth and expansion. It’s hard to find a minuscule example of someone who has been laid off or somebody who has cut back. There wouldn’t be any reason, from an underlying economic perspective, that our commercial real estate should not be flourishing. It’s very, very solid.
DAVIS: This is the niche that we are in. We had a record year last year, the biggest year that we have ever had, but we are definitely seeing a slowdown this year. Like Jim said, it is typically slower this part of the year. But we have seen a dramatic slowdown, and we are definitely seeing a slowdown in the Las Vegas market.
MILLER: As a national real estate lender, U.S. Bank sees areas that we wouldn’t touch with a 10-foot pole right now, and we are cautious because one of the first areas the OCC will start to really scrutinize in the national banks is the commercial real estate. But that said, in markets like Utah we are very much still in business and encouraged by our company to remain in business here and look for opportunities because the fundamentals here are strong and there’s a lot going on. It may not be the best year, but good projects will continue to get done here because we are not considered one of the problem areas in the country.
THREDGOLD: For deals financed locally, the market is still good. What we are seeing nationwide is an increase in the spread, commercial real estate pools that are spliced and diced into different types of securities. There was a story in The Wall Street Journal a few days ago about the idea that traditional spreads were 25, 35, 45 basis points above Treasury and now they are about 125 points above. So some of this buy resistance and investor anxiety about mortgage pools that are sliced and diced into the different things is getting some buyer resistance around the world.
Are you seeing changes in foreclosures or any kinds of nonperforming loans?
PACKARD: We are seeing, obviously, an uptick in the problem loans, but not of a significant nature. Certainly we read the headlines and wonder where it’s at. It is certainly not at our institution. We are dealing with some problems as there is over supply in different segments of the market.
As far as having what we are reading about in the depressed markets – Las Vegas – Florida, California, we are not seeing that at all. There are a lot of buyers out there with a lot of cash so we are not seeing or feeling the risk of having to hold on to properties for a long period of time. We think that there are people out there willing to come into the market and purchase the properties if we do have them, and that’s certainly been the case.
BEARD: We have seen the same thing. Occasionally, throughout the history of the bank, we do foreclose. What we are finding is that when we foreclose, there are buyers and they are certainly there ready to come in. They are always looking for a good deal, and that has some downward pressure in terms of pricing. But there are people that show up to the sales. There are people that are active in trying to negotiate acquisitions from a bank. That’s a positive sign that everyone is not frightened off by what is going on.
ANDERSON: We recently foreclosed on two houses. The same builder. There were three buyers at the sale and they bought both houses. They didn’t get a steal, but they got a reasonable deal. We have one other home in foreclosure for an individual that lost his job, and those are our total problems in the whole bank.
THREDGOLD: If you look at the housing market the last four or five years, the sexy states to be investors in from 2003 through 2006 were Arizona, Nevada, California, and Florida. If you look at the rise in foreclosures the last 12 months, more than half the increase nationwide is in those four states. If you pull the four states out, the numbers are up modestly.
But the typical American home in the last five years rose 50 percent. The typical Utah home rose roughly the same. Even after declines in 2007 in the four states, those four states still had an increase of 84 percent. At one point it was 100 percent over a five year period. So the speculators who chased the idea with dollar signs in their eyes of buying a condo in Las Vegas, California or Orlando fueled outside speculation. All the flippers are struggling and a lot of us don’t have a lot of grief for them because they got carried away.
MATTHEWS: My analysis is that even in the most heady days in Utah, we were not building too many homes vis-a-vis our job relationship or the number of people. Basically this problem was an affordability problem of certain segments of the marketplace, not a high interest rate problem and not the fact that we were actually overbuilt in the traditional sense. If, in fact, we actually need to sell these homes, and if this situation with the conforming mortgage comes to be, and if normal prime mortgage rates remain at 5.5 percent, I actually believe that this problem is going to be mitigated much quicker for Utah than what we have worried about.
THREDGOLD: I would disagree with that a little bit, to the extent that one reason in 2007 we had the weakest level of new housing starts since 1990 is because we got a little carried away in terms of home building in 2005 and 2006. At one point a few months ago, we had 90 percent more new homes for sale than we had a year before. Every one of our customers that are builders says, “My project deserves to get built. It’s the other builders who need to back away.” That’s the nature of the beast.
BROWN: To Kelly’s point, there are parts of the marketplace that are struggling more than others. Go to the southwest part of the valley and there are a considerable number of overbuilt homes and lots that are available, and prices are very soft. We have seen some builders that have essentially lost everything because they were overextended. They invested all their cash into property. They can’t move the property. They have no interest or no cash to carry the project so they are stressed and they are selling some of the product at 20 percent discounts, which is devastating to them. That’s reality.
We talk about market adjustment; which is part of that. But people don’t want to drive for an hour and a half on the west side of Utah Lake through that horrible traffic and pay a high price too, when they can find something closer in. I think there have been some very, very viable lower cost projects along the TRAX line. Projects under $300,000 are actually doing quite well. Houses over half a million dollars aren’t doing as well because there are too many of them. Sometimes they are located in a place people would choose not to be and still have to pay that kind of money.
MILLER: People who had no business buying $500,000, $600,000 or $700,000 houses were trying to buy those. Twelve to 18 months ago, anybody could go and get a low or no-doc loan and put down whatever income they wanted and qualify for a house. Those loans are gone. You can’t get one of those right now. Utah will absorb these 2,600 dwelling units because the state continues to attract a lot of quality jobs, and those houses typically are going to come in with buyers that are in mid- to high-level management positions.
There are hundreds of bills in front of Congress right now driven by the crisis, and it looks like there may be changes to regulations on the consumer and real estate lending sides. Are there any particular bills that you are concerned about or that you think would be helpful to the industry?
BEARD: When you look philosophically at legislation, you have to look at the purpose. To me, government’s purpose is to ensure that what is going on in the business arena is fair and honest. If you step out of that arena, then you ought to be penalized. To me, a speculator who says he is buying a home to live in four different times with different lenders is intentionally being fraudulent and stepping outside of the protection of the law. He ought to be put in jail for that type of thing. If the shift of the legislation is to move that kind of behavior to a problem of the banks, I don’t think that is good for the economy. I don’t think it is good for a regulatory structure. I think we ought to make the person who is primarily responsible for it bear the burden of that.
At some point, it becomes ludicrous when you get that legislation. The better legislation is to enforce, and I think most people are aware that banks are highly regulated. We have people that come in every year and look at the safety and soundness. This isn’t superficial. They are there for weeks. They look at specific loans, they look at the different kinds of capital in the bank, the liquidity of the bank. To shift this kind of “anti-civilization type” legislation to a problem with the banks is not a fair way to look at it. I think it is going to damage people in the long run.
PACKARD: I think Rick said it best. We ofttimes find that while some banks did make mistakes, if you follow the mortgages issues back, you find that those were unregulated mortgage brokers that helped perpetuate this. I believe that if we are regulated, so should they be. I think it is a tragedy that we find ourselves, as a banking industry, being the kicking dog of problems that certainly may have some implication to us as an industry but the majority of it would be outside. We hope that they will become regulated, or at least that they will have some supervision over what they do and how they encourage people into different programs.
Some legislators are proposing criminal penalties to bankers who loan to people who are unable to pay in the long run, which could freeze the market for those on the margin of getting loans. Any comments on that?
HEADLEE: If you think about what a bank would have to do to try to comply in a proactive way, there will be people who aren’t even close to the margin who will be affected in terms of what loans they are able to get and what we are able to do as banks. Frankly, I think this is one of the largest risks that we face. If you look at the reactionary type legislation that’s been passed in Washington in the last five to 10 years, every time there’s some event and the political pressure mounts and we pass some kind of a fix, we actually end up with more problems than we fixed.
The markets are incredibly efficient. The markets work. There are incentives in the market to not make some of these mistakes again that you are seeing right now. The remedies that Congress is proposing, especially the subprime bill that you mentioned and the proposal that is floating in the Senate, would create much more harm than they would solve.
LEARY: This is a problem. It didn’t originate in the depository institutions. It came from outside the system. That’s probably unique in our history, that a credit risk and liquidity risk came from outside the depository system, but it is affecting us.
Part of the answer is to make the states the regulators of the mortgage brokers, by and large. The states have tried to respond, at least a number of my counterparts. Over the last three years they have laid the foundation, and as of the first of January there is now a national mortgage licensing base system that the state legislators have put in place, starting off with about six states. At the beginning of the year they will add about eight more states every six months into the system. I think it will go in large measure to addressing whether or not that segment of the business has been appropriately regulated. The attempt is that it needs to be more regulated if it is going to survive going forward.
Do you anticipate major regulatory changes in this arena?
LEARY: I would say my personal bias is I hope there aren’t any. I agree wholeheartedly that the market has adjusted to what has gone on. Anything that Washington does at this point will probably simply exacerbate the problem. I don’t know what they can do that would help here. But there’s a segment that’s been lightly regulated in the mortgage brokers, and I think increasing that regulation is prudent. It has been done by state banking departments. In Utah, I don’t have jurisdiction over mortgage brokers; but in the vast majority of states, they do.
HEADLEE: From a market standpoint, I think we need to wait. Right now none of the stuff that led to this is going on. If we start seeing the loans come back and seeing that behavior, then maybe you have to look at it and say, “We are going down the same road. We need to do something to stop it.”
I think Washington’s only responsibility, if there is any, is to protect individual consumers from unethical and dishonest behavior that clearly is not going on inside the regulated depository institutions. Whatever they do, they should exempt regulated depositories from it.
BROWN: I think part of the problem was that the secondary market had terms that were far more liberal than the primary lenders. If you make a construction loan to someone, they could get a loan on the secondary market that was far more aggressive than what we gave them. They would do it on stated income basis, and it was based on FICO scores. Pretty soon that got so liberal that if you were warm and had a FICO score, nothing else mattered. You could lie about your income, misstate all kinds of financial statement issues and it just was absorbed upstream. The people underwriting the pools of loans were a little over aggressive and overzealous of their characterization of the quality of the pools, and they were sucked up because the rates were high. They were greedy in taking on what they thought was an acceptable risk.
Then when the default rate exceeded the amount of the securitizations and started to tumble like crazy, all the sudden they had all these losses. I think somebody will pick up the pieces and pick up the loans that are way below market, and there is value there. They are probably worth more than what the market says they are worth if you want to collect them or get value out. Somebody will make money on this whole thing. But the ripple is what has hurt us.
PACKARD: I think there’s another point we ought to think about and that has to do with liability. I have always believed that if you write a mortgage and sell it upstream, you still have an inherent liability with that if you have misstated or somebody who is an employee of yours does something wrong in that file. Now, that may not be the case, but I have always looked at it that way.
It’s a principle of honesty and integrity, and that’s where we get back to regulation of the mortgage brokers. Who is watching over them and where is that integrity and honesty of what they write? If you get a rogue broker, they can write anything and sell it upstream. They have no liability. They have gained a commission and they can write this in multiple ways. You see this in spades when this comes to investors and flippers. That’s where I think that we, as bankers, hold that principle of integrity and liability always. But it’s not being fairly regulated with other players.
HEADLEE: To build on that, the input problem into the system at the mortgage broker level is not best regulated at the Congressional level. That’s probably what is hard for Congress to deal with. Most likely it should be done at the state, even the county level. It has to be done at a local level where they can regulate them very closely.
THREDGOLD: Most of the problem with the whole subprime issue is we’ve moved away from the idea of lender risk. For commercial banks, your lending officers are compensated based on making sure the quality is good, the documentation is good, the “I”s are dotted and the “T”s are crossed. When you have the whole proliferation of new mortgage brokers coming into communities, the incentive for the lender was to make as many loans as they can, lend as much money as they can and at the highest rates they can. And the loans would then get packaged and sold, so the element of risk was irrelevant.
We have a huge variety of loan products out there now. Are you seeing a change in the products you are offering?
BROWN: We mirror what the secondary market offers. We have a mortgage company and loans that are originated by the bank, but we don’t really hold anything. We will sometimes do some bridge financing for someone to help them for a short period of time. But we always put a call on those. I don’t think we have a single 30-year loan on the books. Everything that we offer is something that we can place with a secondary market alternative. The terms we offer mirror the terms we can get in the secondary market.
Have you seen any change in what they are willing to buy in terms of the type of product?
BROWN: We’ve seen the market change a lot. That’s part of the problem. People that had access to credit before now don’t.
I’d hate to have to pick up all the pieces with tax dollars when the mortgages fall apart. The quality of the loans still has to perform. But if the secondary market will maintain a quality level on the loans they get, you won’t have a problem because the loans will perform.
So are you changing any of your product offerings with regards to the second mortgage?
PACKARD: We never did them. There were institutions or places that did 100 percent financing. I think if you go up to the $750,000 level and still do a hundred percent financing, you run some risk. It all goes back to the credit quality that Dave mentions. That’s the premise of all credit.
HEADLEE: To lump all the product variations into this box is really a disservice. Banks have been very sensitive to their customers’ needs and we do have a lot of great products out there. The question is what is driving those variations? If it’s legitimate needs of legitimate borrowers, they are high quality and so forth, then these are just great products. But if the reason for the variation is to get somebody into a loan that they shouldn’t be in, that’s a bad product.
I don’t think you see a lot of our banks getting into variations on products to get people loans they shouldn’t be in. That was another part of the industry that isn’t as highly regulated. And that’s garbage in, garbage out. But if we raise the limit, it will be big garbage coming out if we don’t fix the problem going in. And that’s what we have to focus on, the quality and underwriting.
What trends are you seeing historically or what do you anticipate seeing in your institution, particularly in Utah?
MARTINEZ BISHOP: It does seem like Utah has been kind of insulated from things that are going on nationwide. JP Morgan Chase has weathered the storm fairly well so far. We have tightened some of our underwriting requirements on mortgage lending. We used to have a whole product offering that was a lot of different types of loans that we no longer offer. So I think we are just kind of getting back to the basics and not wanting to be quite so innovative as far as mortgage lending practices are concerned.
TAYLOR: Personally, this is almost benefiting our bank, and specifically our district here. We didn’t have some of those products, which at one point was a competitive disadvantage, but now it’s a competitive advantage.
We are seeing more in terms of volume, and our underwriting standards and credit practices haven’t changed at all yet. I’m not saying that there won’t be some tweaks down the road, but none of that has changed whatsoever. It has given us a confidence in the process that we already had and our ability to go to the market with the things we have.
Are there any differences between Utah and what you observe with other banks elsewhere?
TAYLOR: Absolutely. When you look at our economy, especially where Key Bank is headquartered in Cleveland, that’s not exactly the strongest economy in the country. From a corporate perspective, we are so lucky that we have a presence in Utah and Colorado and Idaho and the Northwest.
MARTINEZ BISHOP: We are seeing a change specifically in Arizona. That market is seeing a lot of price values dropping in their homes so there is more due diligence required. Here, we are not seeing that. We don’t have those same requirements.
TAYLOR: I would offer an optimistic view of where we are right now. It begins with the old adage that in an appreciating market, a hot economy covers up a lot of mistakes. I think it’s true. And I think it’s been the case for the last two or three years here. But that time is over. Some of the mistakes we may have made as lenders and as borrowers where maybe it didn’t matter because everything was going to appreciate and be OK in the long run, those times are over and we have to sharpen up our pencils. Maybe our borrowers and some of the builders are going to be a little more careful, too.
I think there will be this cleansing process where at the end of the day, those who are still open for business and ready to go forward will have a healthier environment as the cycle completes itself. I think it is part of a natural, healthy cycle.
THREDGOLD: I think the whole stature of locally owned and regional banks has risen in the last year, and will continue to do that over the next few years. You get these mortgage brokers that come and go. They make these wild claims and then six months later they are out of business, the doors are closed. The banks are still here. The banks still have their customer relationships and still offer good products.
TAYLOR: You are starting to see some of that in terms of stock prices. We are all in the same pond. As the financial industry took the hit, we all went down. Now fourth quarter earnings are coming out and you see the cream rising to the top.
MILLER: What we continue to see and believe is that Utah will perform proportionately better than the national economy. Not by a large measure, but if the national economy is flat in ‘08, Utah may grow one or two percent.
Does the fact that our economy is based on larger numbers of smaller businesses as opposed to a large national chain create risk?
THREDGOLD: Utah’s economy is a very diverse economy. Thirty or forty years ago it was about military and steel and copper. Now it is financial services, it’s trade, it’s trucking, it’s legal services. We are not a one-horse town. Utah’s economy has the diversity that as one sector struggles a little bit, other sectors tend to pick up the slack. There are 11 major employment sectors in Utah, and all 11 have added jobs over the last three years.
BROWN: It’s a challenge to hire good people in this marketplace with virtually full employment. People want jobs already have jobs.
MATTHEWS: In that vein, the way we understand the situation is that our wage rates continue to be at a significant gap toward the nation, and I believe there’s no inherent necessary reason that we should be 15 to 18 percent below the national average. I like the idea of a tight labor market and wage rates going up faster than the national average to narrow that gap.
Utah is known as the center of industrial loan corporations. That’s one of the things that makes our financial institution market unique. Does the FDIC still have any restrictions? Do you see any structural changes there?
LEARY: Ironically, the in-place moratorium that the FDIC put in place goes away as of this week. They indicated they intend to process applications as they receive them. The good news is we may have an interest again in the industrial loan charter in Utah.
PIGNANELLI: The silver lining in all of this national concern with mortgages and banks is that a lot of the institutions that were attacking industrial banks are having problems of their own. What has come to light is that because of the great way regulators have regulated industrial banks, industrial banks are some of the safest and most sound financial institutions in the country.
You don’t hear anymore the accusations that somehow industrial banks are going to lead to the downfall of the American economy. Industrial loan corporations are very well regulated, especially in this state and by the FDIC. But the accusation was that somehow the industrial loan corporations were not well regulated and therefore were going to cause economic ruin. And because of Mr. Leary and others, that’s proven not to be the case. So this actually is helping Utah’s financial services, along with Nevada and others.