Gov. vouches for state banks

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By Roger Snodgrass

Bill Enloe, chairman and CEO of Los Alamos National Bank, said this morning that he thought honesty was the best policy when talking about the banking situation in New Mexico these days.

He was responding to a question about Gov. Bill Richardson’s press conference Thursday, and called to reassure New Mexicans that the state banking system is sound.

“We’re all different,” Enloe said, “although we’re probably all seeing higher past dues, more non-accrual and more charge-offs.”

He added, “We are exceptionally fortunate to be where we are. Our problems are nothing compared to many areas, in fact most areas in the country.”

Earlier this month federal regulators took over the failing IndyMac Bank — the second largest financial institution to fail in U.S. history. The California-based savings and loan was one of the nation's largest home loan lenders, including riskier mortgages.

There are 37 state chartered banks in New Mexico with $9 billion in assets and deposits. They are licensed and regulated by the Financial Institutions Division in the Regulation and Licensing Department, the Associated Press reported.

“Our banks are well managed and well capitalized,” said William Verant, director of the division during the press conference.

New Mexico banks have experienced lower loan losses than other states, he said. The rate of charge-offs for bad loans by state chartered financial institutions in Florida was seven times higher than in New Mexico during the 12 months ending in March and the rate in Nevada was almost 13 times higher than in New Mexico, according to statistics from the Federal Deposit Insurance Corp.

Enloe said the public in general doesn’t know how the banking system works.

“We sell loans to Fannie Mae. What does that mean?” he said, referring to the Federal National Mortgage Association, which has been the subject of Congressional rescue legislation this week, along with Freddie Mac, the Federal Home Mortgage Corporation.

“What is our association? Truth is, we sell loans without recourse. We sell the loan and it is gone,” he said.

Fannie May and Freddie Mac going under would be a big problem, of course, he said, but mainly because it would further reduce the number of places where the bank could sell its loans.

Enloe said the two mortgage-buying institutions, after opening themselves to problems with subprime loans with low documentation, have now over corrected with requirements for 20 percent down and higher credit scores and charging additional points.

“Before the subprime loans and low documentation it wasn’t a problem,” he said. “Now, they’ve gone too far the other way.”

The Associated Press contributed to this story.