TRAVERSE CITY -- Wall Street's ongoing tumult may not be over and could make it harder for businesses and consumers to find credit in Michigan, local financial analysts said.
Financiers throughout the region assessed the damage Monday from the bankruptcy of Lehman Brothers Holdings Inc., and other developments in the financial markets that sent the stock market into a 500-point-plus nosedive.
It marked the second consecutive weekend of blockbuster bad news in the financial markets, following last weekend's federal rescue of mortgage giants Fannie Mae and Freddie Mac.
Perry Adams, a private financial group regional manager for Huntington Bank in Traverse City, said Lehman Brothers' failure was months in the making, and may not be the last investment company to go under.
"Obviously, they've been trying to sell their assets over the past few months," Adams said. "This may or may not be the end of it, but probably not at the same magnitude (as Lehman)."
Financial analysts said the country's troubled housing market and sub-prime mortgage defaults continue to drive the financial crisis. It's a problem that's spreading to international markets, because they're also holding some of the bad U.S. housing debt, and real estate prices also have flattened in several parts of the world.
"At the bottom (this) all started in some way with the housing problem," said Elliot Spoon, a professor of corporate finance and security regulation at Michigan State University. "It's grown beyond that, of course."
Spoon said consumers could benefit in the long-term if financial institutions reduce bad debt by shoring up lending practices. But tight credit could hurt the state's efforts to pull out of its economic slump.
"In Michigan we need lenders to lend, and people to build, and people to hire," Spoon said.
He also said federal regulators delivered a message that they won't necessarily step in to head off a collapse created by poor lending practices.
"I think the government has sent some good signals here, that you've got to be prudent in risk-taking, because we're not going to bail you out," Spoon said.
Financial advisor Paul Sutherland said he received several calls Monday from skittish investors. But Sutherland, president of FIM Group/Utopia Fund, an international investment firm based in Traverse City, tells his clients that market downturns are normal and that there are still plenty of money-making opportunities.
"People that are successful investors tend to look at things in the long term," Sutherland said. "Today, you can find great companies at great prices ... this should be looked at as a buying opportunity for everyone."
