Local economy getting a boost from bailout
The nationwide mortgage crisis that threw the economy off its hinges is now getting some help in the Muncie community. The federally funded Troubled Asset Relief Program has loaned to two local bank corporations with their capital. First Merchants Corporation received $119,000,000 and Mutual First Financial received a loan for $32,382,000. Muncie Regional President, for First Merchants, Jack Demaree says there is a lot at stake for the banks in these loans as well with a five percent interest rate that increases to nine percent if unpaid after five years. That interest rate and other small incentives with the loans is one of the reasons many banks haven’t taken any money from TARP. First Merchants uses the money to “put back into their four individual charters so that they have more capital than they have now. Which means when they have lending demand, they’ll have more liquidity to loan” says Demaree. This, making loans easier for the banks but the process of screening for loaning has stepped up from lessons learned in the mortgage meltdown. Demaree says the process of screening for loans hasn’t changed, but it’s the intensity that has. Now when a person asks for a loan it’s the credit situation of an individual that has seen major differences. If you have a high credit score, but are not hitting a limit on the credit you own and spread too wide on the amount of credit you have, that’s receiving huge deductions in determining whether a person receives a loan or not. “I’m not gonna say it’s all rosy for 2009. I think the talking heads on the television, which you can find whatever opinion you want, but I do believe the American public will find a confidence level at some point in time and start buying again and we’re prepared to help them do that” says Demaree.
The nationwide mortgage crisis that threw the economy off its hinges is now getting some help in the Muncie community. The federally funded Troubled Asset Relief Program has loaned to two local bank corporations with their capital. First Merchants Corporation received $119,000,000 and Mutual First Financial received a loan for $32,382,000. Muncie Regional President, for First Merchants, Jack Demaree says there is a lot at stake for the banks in these loans as well with a five percent interest rate that increases to nine percent if unpaid after five years. That interest rate and other small incentives with the loans is one of the reasons many banks haven’t taken any money from TARP. First Merchants uses the money to “put back into their four individual charters so that they have more capital than they have now. Which means when they have lending demand, they’ll have more liquidity to loan” says Demaree. This, making loans easier for the banks but the process of screening for loaning has stepped up from lessons learned in the mortgage meltdown. Demaree says the process of screening for loans hasn’t changed, but it’s the intensity that has. Now when a person asks for a loan it’s the credit situation of an individual that has seen major differences. If you have a high credit score, but are not hitting a limit on the credit you own and spread too wide on the amount of credit you have, that’s receiving huge deductions in determining whether a person receives a loan or not. “I’m not gonna say it’s all rosy for 2009. I think the talking heads on the television, which you can find whatever opinion you want, but I do believe the American public will find a confidence level at some point in time and start buying again and we’re prepared to help them do that” says Demaree.