One of the reasons for the proposed federal investment of $700 billion to buy "illiquid assets" from struggling financial institutions is the way those bad loans are clogging credit markets, striking fear in lenders, threatening to shut down liquidity and lending.

So far, not here, according to officers of the Nebraska Bankers Association and the Nebraska Independent Community Bankers.

"Credit is readily available," said Jeff Krejci, president and vice chairman of First State Bank in Lincoln and chairman of the Nebraska Bankers Association. "There are some changes in the way regulators are looking at commercial real estate, but for the most part, I don"t think we have a credit crunch in the state of Nebraska."

A counterpart at the community bankers group agreed.

"We continue to take care of our day-to-day business in our communities, and it is business as usual for the majority of us," said Bill McQuillan, chairman of City National Bank in Greeley, in an e-mail. He"s a board member of the independent community bankers group, and a partner with Creighton economist Ernie Goss in their Rural Mainstreet Report on rural business conditions in the Midwest.

"We are here to help ag producers, consumers and main street small business customers and we have plenty of dollars to lend to continue to get that job done," McQuillan said.

Kurt Yost, president of the community bankers group, offered a qualification: "The freezing of credit or the lack of liquidity on Wall Street has not restricted our ability to lend," he said in an e-mail. "However, the uncertainty of our financial markets makes the decision to lend more difficult."

Krecji said mortgage loan qualifications and standards have not changed and home loans are still available, if they conform to secondary market guidelines and if the borrower has a credit rating of 600 or more.

"We haven"t tightened credit scoring models," he said. "I think those have remained the same and that"s a reflection of what"s happened in the state. Defaults are not quite as prevalent here.

"There might be an isolated instance of a certain bank in a certain market, but we haven"t changed underwriting standards."

What bankers fear more than the uncertainty of the federal assumption of massive amounts of bad paper is fear among the public.

"It"s so important for the media not to overreact over certain institutions," Krejci said.

He and McQuillan emphasized nobody"s ever lost a dollar in a commercial bank insured by the Federal Deposit Insurance Corp.

Otherwise, there is some uncertainty on what"s happening in Washington.

"We do not have an opinion right now on the plan," Krejci said. "We are watching and are listening to our national trade association daily. Something needed to be done or there was going to be a freeze on credit, and it could be globally.

"It"s difficult for us to look at the global picture. I can talk to you all day about our Nebraska base. But the ramifications of what (federal authorities are) doing will probably not be known for a couple of years."

His group would like to see more strength in Wall Street regulation, as strong as his organization"s banks have now, Krejci said.

Again offering reassurances, the bankers say the state"s banks are generally in good health and have far more money reserved for losses than they have in non-performing loans.

Krejci attributes the general health of Nebraska"s commercial banks to their avoidance of subprime mortgage lending.

"(U.S. Rep.) Barney Frank said it best when he said if all home mortgages would have gone through regulated financial institutions, we wouldn"t have had this problem," Krejci said. "That"s a bold statement, but true in my opinion.

"There were very few subprime loans in this state and most were off the Internet," he said. "Our community banks, we"re not doing that kind of a loan."

He advised nervous depositors to talk with their banker.

There are ways to structure deposits to make sure deposit insurance covers amounts above $100,000 in bank accounts and $250,000 in IRAs, both McQuillan and Krejci said.

McQuillan had a last kick at the troubles of the investment banking world.

"We have been shouting from the mountaintops for over 10 years that banking and commerce and banking and Wall Street combinations is asking for trouble, but no one would listen.

"Now everyone knows why," he said in an e-mail.

Yost, president of the Nebraska Independent Community Bankers, added his endorsement of what the federal government is doing now.

"At the end of the day, the government bailout proposal must happen to bring stability and confidence to all credit markets," he said. "As a taxpayer and an investor, they damn sure better do something, or it could wipe us all out."