In Washington D.C., the federal government is hashing out details on a $700 billion assist to the financial system.

In Le Mars, it's business as usual. People are buying groceries, selling shoes, checking out homes to buy, clocking in at work.

(Advertisement)

The question is at the same time distant and pressing: should we be worried?

The Daily Sentinel spent time visiting with different financial business people in the community.

Their answer, in short -- breathe.

What street are we on?

First, several local bankers noted, Main Street Le Mars is not Wall Street.

While large investment banks like Merrill Lynch bet heavily on sub-prime mortgages and are taking huge losses since housing prices have fallen and foreclosures have grown, the story is different for community banks.

"We don't even get into those kind of loans," said Don Burwitz, vice president at a local bank. "We're much more diverse -- we've got commercial, agricultural and housing loans -- that means less overall risk."

We are a global economy now, Burwitz noted, so what happens on Wall Street and around the world does eventually have a local impact.

"It will slow the economy eventually here, too," he said, but was optimistic.

"While I think we'll see the overall economy slow, the agricultural markets are robust here, our housing market here is stable, we have a number of fairly stable industries," he added. "We have a lot of positives."

The Midwest doesn't see the big financial swings of the East and West Coasts, Burwitz said.

"We in the corner of the world known as northwest Iowa seem stable," he said.

The federal government's proposed $700 billion bailout of lending giants on Wall Street, according to top news and financial website Bloomberg.com, could be the "most far-reaching federal intrusion into markets since the Great Depression."

Burwitz said the government's involvement may be somewhat of a necessary measure.

"If not, there would be concerns on the market as a whole. They're trying to have stability in markets," Burwitz said. "I think they're trying to do this prudently and with caution. We're in uncharted waters."

Mutual funds and 401k accounts

Even in Iowa, the average Joe is connected to Wall Street, according to Gregory Mitchell, a financial advisor in Le Mars.

People who own retirment plans like 401k, 403b, IRA or state retirement funds all own stock in American Industry -- stock traded on the open market.

"We are all exposed to Wall Street," Mitchell said. "It's not as far away as New York."

People have seen over the last year that those funds have dropped in value, but Mitchell said his broad outlook is positive.

If people own mutual funds, they own American Industry -- and that's what Wall Street is, he said.

While American Industry has had fluctuation, 99 percent of the time it is the best place to financially invest, Mitchell added.

"But you have to be patient," he said

People who invested in 2007 might not be happy today, but in 2027 they'll be happy, he predicted.

In Mitchell's 28 years in financial advising, he's seen other dips in the market.

In 1987, the Dow Jones fell more than 500 points in a day -- about 23 percent. But the market worked itself out, he said.

"It always works itself out. One thing you don't want to do at a time like this is panic," Mitchell said. "Take a deep breath, step back, reassess the situation, but definitely don't panic."

Since 2000, there's been more fluctuation in the market, he said

"And since 9/11 we've had our shares of ups and downs, but it's still a good place to invest," Mitchell said. "There's been volatility, but I'm glad to see some of the markets have corrected themselves. We've seen over the last 100 years the market works, so let it work itself out."

The financial system has been in the spotlight, he noted, but when markets are steady, no one is asking questions.

"We've had times of 25-30 percent market fluctuation, but we've always come back," Mitchell said. Sometimes it takes longer, but we always come back."

Money in the bank

"There's no reason to panic with your community banks," said Kelley Pick, a first vice president at a Le Mars bank.

Pick, who deals closely with depositors, said she's had several customers asking if their CDs, savings and checking accounts are safe.

"A lot of people are concerned about their FDIC insurance," she said.

The FDIC, or Federal Deposit Insurance Corporation, insures deposits in banks for at least $100,000.

Deposits in different ownership categories -- like single or joint accounts -- may each be insured for that amount.

Individual retirement accounts (IRAs) are insured for up to $250,000.

In 2008, Pick said, not a single customer in the United States lost money in a defunct community bank.

Less than 10 community banks in the United States, many located in Arizona and California, closed this year, but FDIC insurance and the banks that bought out those defunct banks completely covered the deposits, Pick said.

"Not one of those depositors lost any money," she said.

Even beyond FDIC coverage, people have very little need to worry about local deposits, Pick added.

"Our examiners will not allow us to put our customers at risk," she said.

Community banks like the one she works for are stable, she added.

"Banks in our area are good and sound, she said. We are based off of agriculture and agriculture is good right now."

Banks that have gotten in trouble were lending to people who couldn't make monthly payments, Pick said.

"We do not make those loans. We have strict guidelines," she said.

Pick encouraged people to visit with their banks about the FDIC insurance coverage on their accounts.

On loan

With the souring of the sub-prime housing loan market -- where borrowers banked on rising real estate prices to pay off their home loans then got stuck with higher payments than they could afford when the housing market dipped -- changes are likely ahead for the loan industry, Burwitz said.

"I think the days of 100 percent financing are done," he said. "They're talking in congress about further restrictions and more information needed to get a loan."

Much of that financial background information is already required to get loans from local banks.

Matt Ahlers, president of another local bank, said he doesn't foresee area banks having to make major loan changes.

"Borrowers," he said, "working with strong local community banks are really likely only to feel a minimal impact at this point."