As I have followed recent events, particularly of the past three weeks, I am compelled to share some thoughts about what is going on in banking: Merrill Lynch. Lehman Brothers. Fannie Mae. Freddie Mac. It's a who's who of Wall Street giants - all in trouble. If these giants can't survive the country's economic woes, what chance can the smaller community banks have? The answer is most community banks did not participate in the subprime mess responsible for the upheaval across the country. We are going about business as usual, working hard for our communities and doing fine.

Some in our industry, however, overestimated their intelligence, ignored the fundamentals of banking or got greedy. Now, in many ways, we are all paying a price for their actions.

The past three weeks have been truly extraordinary

When the year began, there were five major broker/investment management entities. In March, Bear Stearns became the first of the big five to fall, and JP Morgan secured Federal Reserve Bank assistance to purchase it. Three weeks ago, Freddie Mac and Fannie Mae, the country's largest purchasers of mortgages, were nationalized to ensure they remained viable and to keep the housing industry moving.

We woke up two weeks ago to news that Lehman Brothers was unable to find a partner and declared bankruptcy and that Merrill Lynch was being acquired by Bank of America. Next, AIG, the nation's largest insurer, required an $85 billion loan from the Fed to meet cash shortages. In exchange, the Fed assumed 80 percent ownership in AIG. The Fed then stepped up to guarantee money market mutual funds because one of the mutual funds "broke the buck," meaning the net asset value of a dollar invested in a money market mutual fund was worth less than a dollar.

To top that off, the government stepped in to propose a bailout of the financial industry by offering to buy "problem loans" from the industry to provide some liquidity so lenders would have funds to loan. This is an extraordinary move.

What caused this mess?

What got us to this point was that in certain markets, primarily on the East and West coasts, and in some major metropolitan areas, real estate prices were escalating rapidly. To move those properties, some mortgage companies and big banks came up with "exotic" financing, and as long as prices continued to rise, it worked. These creative financing plans included interest-only mortgages, negative amortization mortgages and "teaser" mortgages with very low initial rates that later were adjusted to market rates. Under these relaxed standards, some people qualified for loans that never should have been approved.