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It has come to this. According to the nation’s highest-ranking and best-paid financial experts in Washington and on Wall Street, the U.S. is facing the most serious fiscal crisis since the Great Depression.

The situation is so dire that the president made a prime-time plea urging a rescue for the monied kingpins of Manhattan Island, and the leadership of the opposition party joined the chorus demanding that a deal be struck.

The price tag for the bailout could reach $700 billion.

The Republican and Democratic candidates for president were called to the White House for high profile negotiations

The secretary of the Treasury dropped to one knee to beg Congressional leaders for quick action.

How quick? There needs to be some sort of agreement by Monday to keep Asian financiers from pulling the rug out from under the world’s money system. That’s the doomsday scenario intended to send the decision-making process into warp drive.

Given the signals from the top, should we be panicking down here in Blount County? Is it as bad as it looks?

No and no. That’s the opinion of Gaynell Lawson, chief financial officer for CBBC (Citizens Bank of Blount County).

“However, this is a significant turning point in the economy. There are mortgage loans that are not paying. Some have been resold and packaged into bundles. Consequently, because of all these assets out there, lending has slowed. It’s very difficult to determine what the collateral is worth,” she said on Friday. Lawson notes the Blount County real estate market never went through the housing boom that went bust.

“There was not a lot of overbuilding (in Blount), so we have not had the problems,” she said. “Locally, banks appear to be strong.”

There are ways Blount Countians can protect themselves in case local banks do get pinched by the national credit crunch. Lawson suggests customers assess what they have in their financial institution. She realizes people are worried about the safety of their money.

“We are getting phone calls. I have always advised: Be insured,” she said. “People don’t need to lose sleep at night.”

People have been moving their money around recently at an increased rate — most likely because of news accounts of the financial uncertainty, Lawson said.

“On TV they say over and over, depositors have got $100,000 covered in bank — true but not the whole story.”

Much more money can be protected in a single bank. Customers need to check with their bank to determine if their accounts need to be rearranged to make sure all their deposits are insured by the Federal Deposit Insurance Corp.

Word from Alcoa Tenn

David Proffitt, president and CEO of Alcoa Tenn Federal Credit Union, said the same applies for his institution: No, you don’t need to panic, and yes the U.S. government backs deposits to at least $100,000 through the National Credit Union Administration.

Just as with bank deposits, accounts can be organized to raise the amount of insured deposits.

“It’s called structuring your deposits,” he said.

He’s aware that having to protect deposits of more than $100,000 is a problem most people wish they had.

By structuring, a husband and wife with no children can increase their insurance coverage from $100,000 apiece to a total of $1.1 million by adding joint tenancy, revocable trust accounts and retirement accounts to their individual accounts.

Alcoa Tenn is not as involved in home mortgages as some other financial institutions, Proffitt said.

“The kind of risky loans and packages you’ve read about, that’s not us. We’re very conservative in our loans. We don’t loan more than 80 percent on a home. When you hear that people get upside down on a house just walk away from it, they don’t do that if they’ve got too much invested.”

Proffitt said the Alcoa savings and loan makes “a ton of vehicle loans.”

He has noticed trends. There has been and uptake in interest in used vehicles, and people who don’t really need to drive trucks are trading in for cars.

Regarding individuals and their investments: “If I were to give advice — be diversified. Live within your means. Don’t get over extended in personal debt — that means credit cards.”

New financial game

Sherry Kasper, professor of economics at Maryville College, said Blount Countians should keep current events in perspective.

“I don’t think that we need to be panicked, but this is a big issue. The financial system clogging up like this is going to have an impact on getting loans and on homes,” she said.

Kasper was relieved that Congress stalled the rush to pass the $700 billion rescue that seemed on the verge of approval early last week. Not enough is known about the problem to know how to fix it, yet.

“I’ve heard people say this is as disruptive as the Great Depression, and we have to rework the financial system. This is not the same,” Kasper said.

“There is a new set of financial instruments. There’s new technology and new financial innovations that we have created.

“I imagine it’s like a mechanic who has had to learn new ways to deal with new automobile technology.”

Blount Countians will likely have to adjust their finances to adapt to the new realities.

“In terms of having a credit crunch, that’s where people need to seriously consider their spending. Have they been living within their means? Have they been responsible when getting loans? Have the loaners been responsible when giving loans?”

The era of 3-6-3 banking is over. That was the rule of thumb for lending after the Great Depression until around 1970, Kasper said.

A customer would get 3 percent return on savings. The bank would charge 6 percent for a loan. At 3 o’clock the banker would play golf with the customer. It was another way for bankers to monitor their customers, she said.

“There was that personal relationship. Bankers still try to maintain personnel relationships, but with the Internet, new technology allows bankers to resell those loans. The new banker may be in Japan or China. They can’t maintain that personal relationship.”

After the Great Depression, there were several efforts to fix the system. It took a while to get it right, and Kasper said that is likely to be the case with this credit crisis.

“Today, we have a regulatory structure that does not meet the technological abilities of the financial structure,” she said.

Today in Washington, there is $700 billion on the table that is supposed to give the government and the financiers time to find a fix.