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If you believe everything you read or hear from the national media about the economic crisis, you will be surprised by the following statement: Rumors of the banking industry's demise have been greatly exaggerated.

Fact is, Wisconsin banks didn't cause the current recession, have money to lend to qualified borrowers and 80 percent still profitable.

But the media too often confuses Main Street depository banks, that are insured by the Federal Deposit Insurance Corporation (FDIC) with non-bank subprime lenders and Wall Street investment banks. As a result, many in the public wrongly believe that it was FDIC-insured banks that made the risky mortgage loans that were the root cause of the housing market collapse and ultimately, the recession.

To put the industry's earnings decline into perspective, consider that most people's 401(K) retirement accounts have lost value in recent months, but that isn't because accountholders made risky investments. It's because stock prices are reflecting the slowdown in the nation's economy. Financial institutions are in a similar situation because the fortunes of banks and the economy are tied together.

Even with the severe economic turmoil, Wisconsin banks continue to outperform their peers nationally in many key categories, including profitability, capitalization and lending.

Bank deposits also increased 4.2 percent during the same period last year, most likely because investors have fled more volatile investments in favor of safe and secure FDIC-insured instruments that offer a fixed rate of return. Nationally, bank deposits rose 3.5 percent, a 10-year high.

The numbers cited above prove that Wisconsin banks are lending, yet some in Congress and elsewhere claim banks aren't doing enough to stimulate the economy. But, banks didn't make the imprudent loans during the lending boom and it is irrational to think they would now, especially with bank regulators demanding intensified due diligence of existing and potential commercial borrowers.

In other words, banks have the money and will to lend, but fewer businesses are qualifying for credit because of impaired cash flow and devalued collateral.

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