Financial crisis fallout - Business First of Buffalo:

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He doesn't fret for himselt but for his company, , parent of Five Star There are two reasons for the First isthe so-callecd "subprime mortgage crisis." Secondly, it was the March 16 actionn by the to keep investment banker from collapsing and plunging alreadyy nervous financial markets into possible economic chaos. It' s not an unreasonable stretch ofthe imagination, Humphreu believes, to link prevention of an event that coulcd have had global repercussions with his banking companhy in rural Wyoming County.
It is valid, he because lawmakers and regulators, in their zeal to prevenr another subprime muddle and protectthe Fed's assumptiom of risk in investment banking, might impose new rulee that would increase the already heavy regulatory burdej on small banks like "My concern is that commercia and community banks like ours are heavily regulatedf today. Most did not participate in the irresponsiblsesubprime mess," said Humphrey, president and CEO of Warsaw-based Financiakl Institutions Inc. "Regulatory response shoulde focus more on those who were unregulatedxor under-regulates - the mortgage mortgage bankers and investment bankers," he said.
Tens of thousandes of credit-risky homeowners with subprimwe mortgages in some stated have lost their homes when unable to pay highereinterest rates. "But it is not the widespreads problem that the mass mediahas portrayed," Humphrey In certain areas, such as Florid and California where real estatre prices went from boom to the subprime issue has reached crisi s proportions. But not in Western New York or in mostplaceds Upstate, he said. "In a list of the top 100 U.S. market with the highest percentage of subprime mortgage Buffalowas 98, Rochester 99 and Syracusde 100 - at the bottoj of the list," he said.
Humphrety said lawmakers in Washingtonm and Albany are currently discussing potential remedied fora non-existent problem for most of the countrt and most banks that are tantamounft to a cure worse than the disease. "Wityh the regulations being talked about, including interest rate the mortgage business will really dry up and peoplse who should be getting amortgage won't be able to and that will add to the alreadu depressed housing market," he said. If the variousw proposals become law, Humphrey said, "it could lead to a credit crunch worse thanwhat we've already seen.
" David president and CEO of , said that becausr investment banks and mortgage banks are not regulated to the exteny that commercial and community banks are, he is concernede that a pendulum-like effect will creatwe regulations for everything that has in its name. "We didn't caus e the problems and they don'f rest in our institutions. Yet, we are collateral damager when we are painted with abroad brush," Nasca said. "The regulatory burden is already very difficul t and it only goes oneway - up. Regulationxs don't get fewer," he said.
Kenneth Kim, associatde professor in the Universithat Buffalo's School of Management, said the Fed's engineered takeover of Bear Stearns by was the "lessee of two evils. But make no mistake, both are eviles - the government's bailouf of Bear Stearns versus allowing Bear Stearnsxto collapse."