Nebraska's economy is healthy, its banks are strong, farm income is headed for another good year and attendance at the Nebraska Bankers Association's annual convention, which starts today, is up by about one-fourth.
So what could be bothering Clark Lehr, the new chairman of the bank industry group, and new chairman-elect John Stinner?
Turns out there's plenty of uncertainty behind the current good times, they said Wednesday at the La Vista Conference Center. About 700 people are to attend meetings there through Friday.
The group's new top officers, to be elected during the meeting, cited federal health care legislation, new financial regulations, the new Consumer Financial Protection Bureau and political gridlock in Washington, D.C., as critical issues facing banks and the businesses they support financially.
Although the problems are not at the crisis level of the 1980s or the 2008-09 recession, Lehr and Stinner said, they are important and need attention from government and industry leaders.
Lehr is president and CEO of First Nebraska Bank in Columbus. Stinner is president and CEO of Valley Bank in Gering.
Lehr said the uncertainties slow down commerce. Even though banks have plenty of money to lend to qualified borrowers, they said, uneven enforcement and excessive rules can block financing for business expansion and new jobs.
“Banks want regulation,” he said, to keep the financial system in order and protect consumers. “But overregulation can be as bad as underregulation.”
Stinner said some regulations require him to charge certain interest rates for some types of mortgages, regardless of the risks that the bank would be assuming with the loan. While the mortgage industry needed “cleaning up” because of abusive practices by some lenders, he said, regulations also should not stifle proper lending practices.
Owners of some small banks have cited new regulations as one reason they have merged with larger banks. Lehr said small banks with limited staffs may struggle to comply with the rules, but the bankers group has a program called “Compliance Alliance” to help its members.
Stinner said small banks can comply with the changing regulations. “We adapt. We deal with adversity,” he said.
Both men said that the recent good times in agriculture do not signal an end to the traditional economic cycles of boom and bust in farming. Although export demand, grain prices and other factors have been favorable lately, farming is still a risky business, they said.
Lehr said recent farmland sales in his area went to buyers from New Jersey, Florida, South Dakota, North Dakota and Colorado, indicating investors view farmland as a good alternative to other forms of investing.
That pushes up land prices, in turn raising the rents that farmers pay for land and requiring higher grain prices for farmers to make a profit. Prices also are rising for fuel, fertilizer and other supplies, which squeezes farmers' profit margins further.
Stinner said farmers and the bankers who support them financially shouldn't be complacent, even though population growth and the increasing world demand for protein are long-term factors in agriculture's favor.
“When everybody starts thinking that this is the new normal, that's when we would start to have problems,” he said. “People do a good job (on the farm). They just have to keep on it and don't let up. I think we've all got to be watchful.”
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