Failing Banks and Investment Banks are forced to merge with other competitors…The “Too Big to Fail” banks are summoned to the White House and forced to take TARP funds…  GM, once the country’s largest corporation has its CEO forced out by the President…Contracts are routinely abrogated, and Congress seeks to “cram down” mortgages…The FDIC seeks to retroactively assess all banks for the sins of a few..

Surely it is important for our government to address, and change the “systemic risk organizations” that exist today. But the prescription for the health of our economy is not in asking our government to take control, but rather in returning the system to a place where the entrepreneurial spirit lives; Main Street, USA…

What happened to being a steward of your company’s capital, and making risk/reward decisions.. If you make good decisions, and deploy your capital intelligently, then you are entitled to whatever profits inure from your business. If however, you make foolish mistakes, and take on undue risks, you are punished by losing your capital, and possibly your entire business. Is that not what has made this country great?

We have become a country who wakes up every morning to the news, newspapers, TV shows and other media outlets for direction. It is as if our businesses success or failure is determined by what is happening in the media… The truth is that like any other time, it is what we do every day that makes the difference between our success and our failure. The difference is that today we do not have a rising tide to help us. The things that we have been accustomed to are not the same. What used to work, day in, and day out, does not work anymore.

In these times it is especially important to remember to run our businesses, every day, and look for new ways to innovate, improve, evolve and be different. People are coming back to basics, back to things they can understand, back to a place where service matters and hard work is respected again. For some these may be the worst of times, but for those who remember that “hard work never killed anybody,” these may be the best of times in generation, or quite possibly, a lifetime…

The recent market move to the upside was kindled by the revelation that banks were actually able to make profits if they followed a simple plan… They take in deposits at a low cost of funds, and they make loans priced at a higher price of funds, keeping the spread.

This scenario has been helped by the Treasury and its aggressive moves to keep short term interest rates low. The steepened yield curve has been the best ammunition to combat the inexorable march toward the battlefield of deflation, which similar to trench warfare, has no winners.

Maybe this is why over two thirds of community banks continue to be profitable even through the darkest of our current times. Banks like North Jersey Community Bank, which take in deposits from the surrounding communities, and with local knowledge and prowess, make qualified loans in those same communities, at a profit. Those loans have helped start businesses, expand others, create new job opportunities, and help build the neighborhoods that many dream of living in. It has created more economic stimulative than any government financed initiative could ever hope for.

Now that we have been given a glimpse of the psychological, economic and structural goodwill that can be brought by supporting our banking system, we need to focus on how to keep that “Simple Plan” alive.

Mark-to-Market: The SEC and the Financial Accounting Standards Board need to move expeditiously to reform the mark-to-market accounting rules which are needlessly removing capital from banks which have held-to-maturity assets, which are performing, but cannot be priced because the market is frozen. Kind of like trying to find a buyer for a gold bar amongst the passengers of a sinking ship, and not finding any, declaring the value to be zero…  After the survivors are rescued, the salvage efforts are completed, and the gold bar found, has the value been restored?

FDIC Assessment: Similar to mark-to-market in that the application of this assessment has the effect of draining capital from banks at exactly the time they need it most in order to support their balance sheets and continue to lend. For each dollar of capital that a bank has, it can comfortably make twelve dollars worth of loans, and take in twelve dollars worth of deposits, making a spread to create a profit. This ill conceived plan would assess banks an extraordinary “insurance fee” just at the time when they could least afford it, and all because of semantics. The claim that the FDIC is running out of money, when in fact it has no bank account of its own, and is merely a line item on the Federal Budget, is absurd, politically charged, short-sighted, and outrageous.  This plan must be stopped, rethought, and reconsidered. It is the consumer who will pay the price, with less lending, and lower yields on deposits.

TARP Funds:  To those banks that are like ours, being well capitalized, profitable, and possess a well thought out business plan, taking TARP is an assault to our capitalist system and goes against the grain of the entrepreneurial spirit.  For those banks that have been weakened by a temporary setback, and need assistance to support their capital structure, TARP can play a significant role in their stabilization. But, for those banks that entered these times with a weak plan, and are being ravaged due to their inability to compete effectively, TARP has the undesirable effect of creating government supported walking zombies that only dampen the fire that needs to burn to stoke this economy back to health.

By providing some additional fuel to the most basic of all economic businesses, that is “banking,” the economy will begin to recover, good sense lending will return, and private investment will once again place value on an industry that works with “A Simple Plan.”

Our “too big to fail nine” money center banks seem to be on a multi-billion dollar a month stipend, and nobody seems to care. The Fed and the Treasury have created the TARP program, and yet they have not helped a single financial institution deal with a single troubled asset.

The Treasury now boasts that they have actually made an $8 billion dollar profit on the first tranche of the TARP funds.  Yet none of this has helped to save one job in the communities that we all live, breathe, and work in.

In fact, those banks have done nothing with the hundreds of billions of dollars that they received from our government to help any homeowner or business person.  They have instead, cut off funding of mortgages, credit lines and business loans, and caused our economy to grind to a halt. Our government has been so completely preoccupied with the “too big to fail nine” that the other thousands of community banks are left in an unfair environment that requires competing with a government subsidized industry that borders on nationalization.

But it is the community banks, banks like our own North Jersey Community Bank, that continue to lend and support our communities. Our bank, like so many others around our country, is profitable, continues to expand, continues to hire, and has done so without accepting a dollar in TARP money.

How do we do it? Our stockholders all bank with us; they live in our market, and they provide the foundation on which to build a strong institution. Our lending is only done with customers that we have met in person, and on property that we have personally visited. Our depositors, are all known on a first name basis, and spread the word that they bank with the strength and security of a local community bank. Our employees come to work each day knowing that what we do is good, and supports the communities that they live in. They feel secure in their jobs and appreciate that our strength allows them to continue to buttress our economy at a time when most fear what tomorrow will bring. We continue to bolster our local charities, and non-profits, as the nationals withdraw their support at this crucial time.

What is wrong here, and where is the outrage???