Following Certain Strategies in Uncertain Times

Dear members,

Our government is contemplating a massive bailout of failing financial institutions. Well known national banks – some of the most storied, well-known names on Wall Street – have been brought down, seemingly overnight.  From the outside, the American financial system may seem to be falling like a house of cards.  Major financial firms tried to expand through leverage. Lenders, financing operations with borrowed money, made loans of poor quality, packaged them as securities, and sold them to investors who sometimes bought them with borrowed money.  The results were nothing short of catastrophic.

The events of recent days validate the virtues of our approach – and highlight the benefit of institutions that support a strong local economy.  At Alternatives, we define leverage in an entirely different yet more traditional way. Your deposits fund loans to your neighbors.  Your business enables money to be returned to working people in our community through innovative programs like IDAs, Business CENTS, and free tax preparation that create a positive ripple effect beginning with the members who use them. Members are heroes – your deposits and loans provide economic benefit to our entire local community, including those of the most modest means.

Individuals everywhere are now looking for safer places to keep their money.  While the excesses of a few make headlines, you can rest assured that Alternatives has maintained a sound and simple approach to managing money.  Your deposits are used to fund mortgage loans.  These are not mortgage loans made to people in far-off places, who may have been steered into products that were unsuitable.  Rather, the more than 20 million dollars in home loans we own are made in the local marketplace, where we have averted the mortgage crisis faced elsewhere.  At Alternatives, rather than make a loan to someone who wouldn’t qualify, we work with the borrower to build credit, and can use IDA accounts to help someone save money for a down payment.  Money we have that is not loaned out is invested safely in guaranteed instruments.

Your money is always safe at Alternatives.  We have had no exposure to any of the failing institutions in the news, and your accounts as always are federally insured to $100,000, with retirement accounts insured up to $250,000.  For more information, please visit http://www.ncua.gov/ShareInsurance/Index.htm.

Oct. 3, 2008 Update: This afternoon, President Bush signed into law the financial rescue bill (the "Emergency Economic Stabilization Act," HR 1424), following the House's approval. The legislation will allow a temporary increase in deposit insurance coverage to $250,000 (from the current $100,000). The increase, according to the legislation, will be temporary; in effect from October 3, 2008 until Dec. 31, 2009.

 

 

 

Tristram Coffin, CEO