Harry's gang: How safe is your money?

Nothing strikes fear in a banker’s heart more than the words, “run on the bank.” It conjures up images of the Great Depression, the Great Recession, and Jimmy Stewart convincing his customers to believe in his savings and loan and stop taking all their money out, thus saving the bank and making a memorable classic movie.

Mark Lanigan, president of Cloquet-area Frandsen Bank and Trust, is one of our local Jimmy Stewarts (or, maybe more appropriately, one of our George Baileys). I had a chat with him after last week’s SVB bank failure, when just about every news story sought to explain the bank failure and just about every other story tried to blame someone else for it.

“This is not a concern with our bank and most community banks across the country,” Mark told me. “Our customers are not involved in cryptocurrency and venture start-ups and technology; our customers have more stable and conservative financial needs. We’re built on stable core deposits from our local customers and local loans,” he said, reassuring me that we are not on the brink of a financial meltdown.

There’s no comparison between the SVB and our local banks, Mark explained. Banks are subject to intense regulation that prevents risk with our deposits and takes a very conservative approach with our deposits. “We invest back into our communities. Not in speculation.”

I don’t really understand banking very much, except I know that they take my money and pay me only 1-percent interest but charge me 9 percent when I need a loan. It’s a system that works in our free enterprise economy, though, allowing normal people like us in Carlton County to buy houses and cars and pay our bills with checks and debit cards.

But people like Mark Lanigan and Anna Carlson, president of Cloquet’s Cornerstone State Bank, do understand it. They run their banks to ensure we can count on them when we need them, while following all the rules and regulations that banks must follow.

It’s those rules and regulations that I’m thankful for. In politics, it’s a common catchphrase that we are “over regulated,” and in some cases, it’s true.

Take constructing a new home, for example. The builder must follow all kinds of regulations, from zoning requirements to building and plumbing codes to warranting the work for years after completion. And the home is inspected by government employees who have the power to alter the construction as they interpret the rules. Every extra step a contractor must make is an added expense, making housing costs higher.

On the other hand, I certainly don’t want to allow shoddy construction or unsafe building practices. It’s important for consumers to know that the house they are buying is safe and sturdy, especially because most consumers would never think to ask the plumber, for example, to install a backflow preventer from the sink to the dishwasher. That’s why we have regulations.

I certainly have been irritated at regulations I thought were silly. I try to follow the health codes in my restaurant, and my efforts paid off whenever the inspector came by. But once, an inspector from a completely different agency showed up. I was fined $400 because I didn’t have material safety data sheets and a program in place for the chemicals. What chemicals, you ask? The dishwasher soap. Yes, I needed a complete program (with annual training) in case the dish soap leaked or something. It was the only time I ever saw that agency in over 30 years in the restaurant business. And I suppose I should be prepared if the soap spills or gets in someone’s eyes. But it was an irritating — and expensive — lesson.

But for us to have confidence in our banks and food supply and bridges and just about everything else, we need to trust that our government is properly and effectively regulating those industries. And that means regulations. And inspections.

Meanwhile, I’ll trust my bank to keep the tiny amount of money I have saved up in the bank. I have two teenagers, and I’m sure going to need that money soon.

Pete Radosevich is the publisher of the Pine Knot News community newspaper and an attorney in Esko who hosts the cable access talk show Harry’s Gang on CAT-7. His opinions are his own. Contact him at [email protected].