Rubbernecking the collapse of the world. The news isn't all bad!
WINNER! One would be Redwood Capital Bank, which joins Umpqua Bank in the ranks of local financial institutions that have opted into the big Bush bailout bill. Last month, the government of the United States of America bought a $3.8 million stake in the homegrown Eureka bank through its $700 million Troubled Assets Relief Program (TARP). That's hardly anything, $3.8 million, in the great scheme of things. We're talking about something like .0005 percent of the total TARP program. Umpqua, an Oregon-based chain with a big presence here, took in a much healthier $214 million.
But it's a bit confusing, you know? Because the idea at the time seemed to be the banking system needed rescue, and both Umpqua and Redwood Capital do hardly anything but talk about how amazingly healthy they are. By the numbers, business is fairly booming at Redwood Capital -- deposits increased 11 percent in the last three months of 2008, loans were up five percent. At the same time, though, the company lost $141,000 in the period.
The last figure is worrying, but it's hardly the all-hands-on-deck kind of numbers we hear about it the national news. Redwood Capital isn't on the verge of going belly-up, exactly -- it continues to grow. Didn't taxpayers think the money approved was supposed to save institutions from going to hell?
"For the major banks, that was the case," said Redwood Capital CEO John Dalby on Tuesday. "When you get down to the regional banks and the small banks, you have to go through a fairly rigorous approval process, and you have to be able to weather the storm." What the TARPmasters are looking for out of the small fry, Darby said, is a reasonable investment.
More worrying than the fourth quarter loss is the fact that the bank recently kissed goodbye to $1.4 million in sketchy loans -- not because the lenders have stopped paying, Dalby said, but because there was a reasonable fear that they might do so sometime in the near future. The TARP monies provide a bit of a cushion in case the trend gets worse.
"In our case, we have sufficient capital without it, but it provides a reserve of capital in the case we see a deterioration in the local economy," Dalby said. And like Umpqua CEO Ray Davis (see "The Big Buy-In," Nov. 13, 2008), Dalby wished to spread the word that the taxpayer is going to get a good return out of the deal, at least as far as his bank is concerned. "We can't pay ’em back soon enough," he said.
WINNER! Another would be Eureka high finance man Rob Arkley, who by all accounts acquitted himself extremely well in a surprise trip to the belly of the beast -- the left-leaning KHSU chat show Thursday Night Talk. Guest host Dan Faulk, old-time Humboldt State radical, proved an ideal interlocutor for Mr. A, who talked (calmly) about the terrible economic state of our union. For once, the KHSU talk show tradition of having locals yak about great affairs of state provided listeners with something that couldn't be found more easily with a Google search.
The conversation rarely drifted out of focus, so Arkley's far more controversial activities on the local stage never spoiled the genial mood, which prevailed throughout. Thus loosened up, perhaps, Mr. A let loose with some opinions that would have seemed antithetical just a few years ago. For one, he lamented that taxes in California are probably going to have to go up -- an unthinkable concession from someone who supported the virulently anti-tax Club For Growth a few years ago. For another, he argued that one-party rule, generally speaking, is a bad thing. Who knew?
All in all, a pleasant evening. I wouldn't be surprised if, in the future, people don't tremble quite so much at the mention of his name.
WINNER! Dodgy companies looking to sell you something you don't need! Apparently a number of local residents have been contacted by a company that uses government-style letterhead, offering to help homeowners with falling real estate values. In exchange for $179, the pitch goes, the company can seek to get your property revalued for tax purposes, so your property tax bill won't be quite so much this year.
County Assessor Linda Hill sent out a press release Tuesday reminding people that this particular service is provided free of charge by her office. It's pretty rare, in any case, that the actual value of a home or other piece of property has fallen beneath its value on the county rolls. If you think yours has -- and if you bought it in 2004 or later, it's possible -- give the assessor's office a call at 445-7663.