April 22, 2009

This is the first of a two-part series on Wisconsin’s banking industry.In spite of a national foreclosure crisis and news of government bailouts, state and local bank officials say “bank” isn’t a dirty word when used in reference to traditional community banks.“We wish we could trademark ‘bank’ because it’s been so generically used, and it’s been so damaged as a result — we want to reclaim it” said Kurt Bauer, president and chief executive officer of the Wisconsin Bankers Association.Bauer said the term has been used even in reference to AIG, the insurance giant that was on the verge of collapse before the federal government delivered an $85 billion bailout.

The company insured subprime loans generated by mortgage brokers who earned their money selling loans to people who couldn’t afford them, then left investors holding the bag for the unpaid debt.“This generic use of the word bank in the national news media is problematic,” said David Stack, president of Superior Savings Bank. “Credit unions are not banks. These mortgage brokers are not banks. Wall Street investment banks are not banks; they’re not FDIC-insured banks.”Community banks are traditionally Federal Depository Insurance Corporation-insured institutions regulated to accept deposits and provide loan and other financial services in a specific geographic area.