A year has passed since the phrase “credit crisis” was first heard, and since economists first explained to us what a sub-prime mortgage is.

A year later, national news still reports banks in trouble, however, and the economy is still less than robust, as a result of that sub-prime mortgage crisis.

The good news for Wyoming citizens is that Wyoming’s banks, including local banks, are strong and they, as well as the state’s economy in general, have been somewhat immune to the full effects of the economic problems that have plagued the nation, said Dr. Sherrill Shaffer Economics Professor at the University of Wyoming.

Even after a full year, though, citizens struggle to understand what happened in the first place, why it is affecting them, and they wonder and hope that their money will be safe.

Explaining what happened, Mike Seppala of 1st Bank believes that banks fail for one simple reason, and the subsequent economic difficulties stem from “loan quality.”

“That is the simple answer: They made bad loans,” he said.

Shaffer agreed and explained further that the nationwide crisis originated in the sub-prime home mortgages, wherein lenders approved of and gave loans to borrowers who did not satisfy the normal requirements.

They were willing to make these loans because of two factors, he said: a home mortgage loan is guaranteed by the house purchased with it, and houses over time go up in value rather than down.

The problem was compounded, said Shaffer, because most of these home mortgage loans had been sold off to financial entities.

The loans were packaged together in pools of loans to create investment package that looked liked an inviting asset to investors — low risk and profitable.

And the belief was that real estate values could not fall.

The problems with this began to emerge a year ago. Real estate values did fall in some places, and many consumers were forced to default on their loans. Things unraveled.

The problem spread to commercial banks because many had also invested in these packages of loans. They either made the sub-prime loans, they made some loans and bought some of the investment packages themselves, or they bought the investments alone.

Wyoming was immune to much of the trouble due to several factors, said Shaffer. With higher energy prices, and a large part of Wyoming’s economy connected to the energy sector, “the state economy is strong,” he said.

In addition, Wyoming’s local bankers “have been reasonable in their lending practices and did not go to excesses.”

Seppala speaking for 1st Bank agreed: “1st Bank is not in trouble. We didn’t make the loans. We stuck to what we know and do best.”

Britt Sloan, Wells Fargo Branch Manager, concurred — they stick to a process that includes a mathematical equation that is equally applied to everyone, and they did not relax their standards during the sub-prime loan era.

“Many banks are fixing and repairing, while Wells Fargo is still doing business,” he said.

Both bankers acknowledged the fear that many citizens feel, and understand that people want to know that their money is safe. Responding to the fears, Sloan mentioned that most banks are FDIC insured.

“If your bank is FDIC insured, and goes under, your money will be OK,” he said.

Seppala pointed out that the FDIC is not government funded, but funded by banks themselves. He also stressed that the “banking industry as a whole is very sound,” despite the media’s attention to failed banks and the concern those reports raise.