By By Lisa Tindell – news editor
It may not have been a crash, but the fender-bender on the stock market Monday may have many consumers concerned about their financial future.
With the fourth largest American investment bank, Lehman Brothers, filing for bankruptcy protection Monday, the 14-month credit crisis has claimed a big victim. That fact has put many thoughts of concern in the mind of bankers and consumers nationwide.
Local financial institutions are concerned, but not fearful, of how Monday's stock market activity will affect area consumers.
Barnett said the credit crunch has made loans less available, with the trend coming to the situation of loans today.
Barnett said he is optimistic about the future of the financial world and believes the banking industry will survive.
Barnett also said Federal Deposit Insured Corporation chairwoman Sheila Bair is showing confidence in the commercial banking industry as well.
That strength will ease some of the fears currently being felt by the activity seen on the stock market this week. The purpose of FDIC is to insure deposits at banks by consumers, and, Bair said, those deposits remain safe.
The FDIC insures bank deposits of up to $100,000 and up to $250,000 for funds in retirement accounts such as an IRA.
In the wake of Monday's slide, analysts predicted the U.S. Federal Reserve would drop the interest rates to help ease worries of investors on every level.
In a press release from the Board of Governors of the Federal Reserve System, the expected reduction in interest rates were not forthcoming.
In the release, the Federal Open Market Committee decided to keep its target for the federal funds rate at 2 percent.
Strains in financial markets have increased significantly and labor markets have weakened further. Economic growth appears to have slowed recently, partly reflecting a softening of household spending.
Tight credit conditions, the ongoing housing contraction, and some slowing in export growth are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.
Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities. The Committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain.
The downside risks to growth and the upside risks to inflation are both of significant concern to the Committee.
The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.