Area banks say they have money to lend
But in some situations, it's more difficult to get because credit standards are tighter.
That's not the case, however, at the Janesville-based Blackhawk Community Credit Union, which serves 32,000 members through five branches in Rock, Walworth and Green counties.
"We've actually loosened our standards," said Bob Carmichael, the credit union's president and chief executive officer.
Carmichael said BCCU has developed a program that will make money available to assist credit union members with loan payments. The program will provide funds to bring any late payment current and offer up to $7,500 for advance payments on BCCU loans. The member then would have funds to pay down other obligations or spend on other needs, such as education.
As a condition, applicants will be asked to participate in a financial checkup designed to improve the member's financial situation.
The program will be interest-free for up to four months, and the repayment schedule will depend on whether the member is making progress on financial goals.
Carmichael said the credit union's reaction is a reflection of more than what's happening on Wall Street.
"You have to factor into that what's happened in Janesville and Rock County," he said. "It's devastating.
"When people know they going to lose 30, 40 or 50 percent of their income, they typically don't borrow more, or they don't do it prudently. But they still have debt that needs to be consolidated or restructured."
Across the nation, many banks have tightened credit standards and focused on making sure capital levels are strong and bad debt is minimized.
That's because banks have stockholders to satisfy, Carmichael said, noting that credit unions tend to be more conservative and answer only to their members.
"We're in a position—unlike the banks—that we don't have to pull in and be defensive," he said.
Two local bankers agreed that credit standards have tightened.
"We absolutely have money to lend, whether it's for a business, retail/consumer, home equity or mortgage loans," said Mary Willmer-Sheedy, market president of M&I Bank in Janesville.
Willmer-Sheedy said that while credit is available for credit-worthy applicants, the standards of appraising risk have returned to levels of a few years ago.
"The underwriting status has become much more stringent," added Craig O'Leary, executive vice president of Farmers & Merchants Bank in Orfordville.
O'Leary said he's aware of customers holding off on purchases. In August, the bank had requests for small loans to cover monthly utility bills.
"I thought to myself that if this is what it's like in August, what will it be like this winter," he said.
O'Leary said the recent bump in Federal Deposit Insurance Corp. levels on insured deposits is welcome in small communities such as Orfordville, where local bank customers have feared that only small banks would be allowed to fail.
Now, he said, customers can take comfort in knowing that their local deposits are insured to a higher level.
At M&I, Willmer-Sheedy is taking some comfort that bankers are pre-approving a significant number of mortgage loans.
"I think that's good for the community because it indicates people are getting ready to buy," she said.
"Our bankers have been busy meeting with people and looking at their options. Some people are being more conservative, more prudent, but there are still cases where they need a new car or a new home, and there is money available."
Carmichael said a BCCU loan committee met with three members this week.
"They came in and said they don't want to face foreclosure or have someone come and get their cars," he said. "They want to pay us back.
"Times have changed, economies have changed and the world is changing. We're in a position to say we're the community's credit union, that we have money to lend and can help improve peoples' financial welfare."