But what about the bad banking?

A representative of the Utah Bankers Association stopped by the Standard-Examiner on Monday to lecture the editorial board on proper reporting of bank troubles. He said media coverage of the death rattles of Barnes Bank made the collapse worse than it would have been if reporters had swallowed their pens.

Howard Headlee also argued that Barnes and other community banks that have encountered trouble since the national housing market collapse got there because they had been working hard to serve a booming housing development market. He complained about lax home loan policies, nothing to do with the business loans of community banks, that fueled the boom and collapse.

OK, did I undertand this correctly? So bank failures are more the fault of nosy reporters and greedy mortgage lenders? Wait a moment. How about the bad banking? I mean, Barnes and a lot of banks smelled big profits in the housing boom and plunged most of their business into the bubble. And when it blew up in their faces, that’s someone else’s fault?

Upon questioning, Headlee acknowledged that Barnes’ ultimate fate was of its own making. Yet the bankers group feels the need to go on tour scolding news organizations for alerting the public to capitalization problems at certain community banks. The message: Trust us. We and the FDIC can systematically resolve banking boo-boos during sensitive periods; no need for depositor panics spawned by news stories.

In the case of Barnes Bank, it had been under scrutiny by FDIC for months, and in its latter days, its shareholders were arguing among themselves. In an open society, that’s information that citizens in a community ought to be alerted to, so depositors and others can go about making their own decisions, backed by knowledge not available from the self-interested banks.

The Bankers Association understandably must feel burned by the loss of the more than 100-year-old Barnes Bank. But pointing fingers in all other directions seems excessively petulant. Before he left, Headlee also complained that credit unions are not subjected to the same levels of public disclosure and scrutiny that banks must shoulder.

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7 Responses to But what about the bad banking?

  1. Charles Trentelman says:

    Banks don’t like to admit that it is their own lax policies that caused this. A good question for someone like this would be :”So, when you heard about home loans being given to people who could lie about their income and assetts, even if your particular bank was not involved, how loudly, and how often, did you scream that that practice was insane?”

    Then watch him squirm.

  2. Justme says:

    Wouldn’t it be cool if all Americans simply pulled all their money out of banks and deposited it with credit unions instead? I did that back when our legislators were trying to impose Draconian taxes on credit unions to make them “competitive” with the banks which several of them (no conflict of interest, though) worked for.

    What a difference! I now have someone who cares about me and not just my money. No silly fees. Better interest rates. Much better service. Open Saturdays and later on week days.

    Yup. T’would serve ‘em right . . . .

  3. flatlander100 says:


    Did you ask him how much of a bonus he got last year for blowing sunshine up editors and publishers skirts?

  4. Kim says:

    “Your company is now bankrupt, and our country is in a state of crisis, but you get to keep $480 million. I have a very basic question: Is that fair?” — Henry Waxman, questioning Lehman Brothers CEO Richard Fuld

  5. Shannon says:

    I totally agree with Headlee, this bank had investors willing to help pull them out of their predicament, and because of BAD reporting I.E. Chris Vanocur not getting his facts straight it caused a run on the bank and made it impossible for this bank to recover what is almost laughable is the scrutiny that these small town banks are under, when the big banks did the exact same thing and ten times more and were bailed out by the government. This bank was trying to do it themselves but because of poor reporting this was a needless tragedy. Barnes never discounted the fact that they had made poor decisions in loans and handling. HELLOOO we all have!!! But the reporting was very careless. I got news for you it is not just Barnes the FDIC has a list of 240 community banks it wants shut down by the end of the year. Stand by more are going to fall and for that you can go straight to the top for who is to blame!! Good for you for even publishing this information. It takes guts!

  6. Ken says:

    withholding information from the investors is unacceptable in any business, why should banking be any different? Bankers know that shady banking/lending practices can cause a “run on the bank” yet they made the decision to participate in these practices. Like it or not someone made the decision to participate in the scam and something tells me it wasnt the media….take responsibility for your actions, dont try to blame others.

  7. Brent says:

    These bankers have some nerve. Barnes had so many bad loans they would’ve gone under no matter what media coverage they received. At some point these loan committees should’ve realized that there were only SO MANY people in Utah that could afford $500,000 homes, not to mention all the other bad loans. So much for all the “gray hair” clout on these bank boards. If I were a shareholder of a troubled bank I would demand new management.

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