WASHINGTON  — Federal regulators say risk remains heavy in large loans made by banks and other financial institutions, though lending standards have improved.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

I know I risk sounding like a shill here, but if you weren’t one of the 500 or so who attended the Arkansas Business 40 Under 40 luncheon a few weeks ago, you missed the kind of feel-good moments that can help balance out some of those feel-bad moments.

I was out of state during the 2015 event, so I had not previously watched the dozens of honorees each step to the lectern and answer one of four revealing questions. What a treat (and, miraculously, not overlong).

My favorite of the questions, although I might have worded it a bit differently, was “What do you wish you had known when you were 20 years young?” I think it’s an even better question for those of us who are (well) over 40, and I’ve found myself thinking about it from time to time since the luncheon in June.

I was still 20 when, on May 17, 1982, I took the journalism degree I had received from Harding University eight days earlier and started my first reporting job at the Pine Bluff Commercial. What I didn’t know then could fill a library.

For one thing, I didn’t know how to use a computer, which was not a big problem since it would be several more months before I had to learn. Reporters at the Commercial were still writing stories on special paper using IBM Selectric typewriters and scanning the text into the rudimentary computer system using a scanner roughly the size of a golf cart. (That may be a slight exaggeration.)

I was assigned to the education beat. At that time, Jefferson County was divided up among nine school districts, so I quickly learned a lot about school board meetings. But even though my father had been an administrator in the North Little Rock School District, I knew approximately nothing when I started. I remember distinctly that the first meeting I covered started with the declaration of a quorum, and a little thrill shot through me. I had no idea what a quorum was — wasn’t even sure how to spell it — but the school board had declared something and surely that was newsworthy! (My next beat was county government. By then I knew what a quorum was; I’m still not sure why a county’s governing body is called a quorum court.)

That first year was miserable for all the usual reasons that transition to the full-time workforce is hard, but after I got the hang of it, I realized that I was being paid to learn all kinds of things. And that was a blast.

So when I ask myself what I wish I had known when I was 20, I don’t wish I had known any specific fact. If I had known what a quorum was, I would have missed out on that little thrill and on the laugh I got when I looked it up in the dictionary when I got back to the newsroom. I would have missed out on one of my favorite memories of being so green that my first city editor, the late, great Joe Farmer, nicknamed me Sheena Innocence.

But here’s what I do wish I had known and what I would want every young adult to know: You need to play your own game. Don’t let the decisions others are making be more than data points in the mix when making your own decisions, because they aren’t working with the exact same factors.

This is such great advice in every part of life. Obviously, our personal decisions — marrying, starting a family, personal finance — shouldn’t be determined by what others are doing. (I say obviously, but for a lot of people it’s not obvious at all.) It’s also true in career decisions. Other people’s paths are just that — their paths.

You hear political candidates talking about running their own races. Has anyone ever run a less typical campaign than Donald Trump? (I’m not a fan, you understand, but I have to hand it to him for originality if not consistency.)

It’s great advice for businesses, too. The worst decisions I’ve seen businesses make are reactionary — either panicky responses or overly optimistic attempts at duplicating a competitor’s move.

The decision that is right for someone else is not necessarily right for you. What’s more, other people’s decisions may not even be right for them — or their families or their companies. Sometimes it’s hard to tell from the outside, so just keep playing your own game.

Tuesday of this week is my 17th anniversary as editor of Arkansas Business, and I’m still learning every single day. The 20-year-old me truly had no clue how young I was or how quickly time flies.

Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.

A 35,492-SF bowling center in North Little Rock weighed in at $2.3 million.

Millennium Bowl of Little Rock LLC, led by Anil Nayar, Aziz Pabani, Akbar Pabani and Kairunnisa Khan, bought its namesake project at 7200 Counts Massie Road. The seller is Millennium Bowl Inc., led by James Moore.

The property now is helping secure a five-year loan of $3.2 million from Centennial Bank of Conway.

The 3.3-acre development previously was tied to a February 2008 mortgage of $1.9 million held by Triumph Bank of Memphis.

The site was purchased for $260,000 in April 2002 from Richdale Development Group LLC, led by Keith Richardson.

Parker Property

A 6.18-acre commercial site in west Little Rock tipped the scales at $1.54 million.

Lexus Land LLC, led by David Parker, acquired the land near the northwest corner of Shackleford Road and West Shackleford Boulevard. The seller is Westrock Partnership, led by Robert Vogel.

The land is part of an 89-acre tract Westrock bought in June 1995 from the Federal Deposit Insurance Corp. for $2.63 million.

Commercial Parcel

A 3.74-acre commercial site in North Little Rock changed hands in a $735,000 sale.

Setu Inc., led by Manoj Patel, purchased the land near the northwest corner of Stockton Drive and Smokey Lane. The seller is Woodcrest Co. LLP, led by James P. Matthews.

The deal is funded with a three-year loan of $1 million from First Arkansas Bank & Trust of Jacksonville.

The property previously was used to help secure a string of mortgages held by Centennial Bank: a $430,000 loan in May 2008, a $5.4 million line of credit in July 2009 and three July 2014 loans of $10.6 million, $3.2 million and $312,641.

The land was part of the 400-acre Springhill Farm the Matthews family bought in August 1959.

John and Martha Matthews acquired it from Fred and Katherine Watkins for $250,000.

Auto Transaction

A 6,739-SF auto parts store in Sherwood rang up a $425,000 transaction.

Clifton Family LLLP, led by Norman Clifton, bought the Advance Auto Parts at 4120 E. Kiehl Ave. The seller is Valley Realty Co., led by Larry Magdovitz.

The 0.79-acre development helped secure an August 2014 mortgage of $460,000 held by First Alliance Bank of Cordova, Tennessee.

Valley Realty purchased the property for $573,000 two years ago from Hal and Vicki Matthews.

Masoud Investment

A 9,900-SF retail center and 44-unit mini-storage facility in southwest Little Rock are under new ownership after a $250,000 sale.

Masoud Investments Inc., led by Wadeea Masoud, acquired the South Heights project at 4729 Baseline Road. The seller is Sunbelt Investment Eight, led by Roger Hawk.

The 1.35-acre development was bought for $335,000 in September 1989 from First National Bank of Fayetteville.

Acreage Acquisition

A 315.8-acre tract in south Pulaski County drew a $220,000 transaction.

Greenwing Properties LLC, led by Joseph Baker and Brian Bewley, purchased the land along 145th Street between Interstate 530 and Wrightsville. The seller is Silvicraft Inc., led by Michael Pierce.

The deal is financed with a 10-month loan of $165,000 from Arvest Bank of Fayetteville.

The property previously was tied to a June 2011 mortgage of $315,170 from Commercial Bank & Trust of Monticello.

Silvicraft acquired the land for $315,000 five years ago from Townsend Partners, led by Lisa and Edward Wright, Mark Townsend and Kristi Floyd.

Bella Rosa Manor

A 5,673-SF home in the Bella Rosa Estates neighborhood of west Little Rock weighed in at $1 million.

Kristen Lienhart and Chad Gossett bought the house from Kristopher Magnuson.

The deal is backed with a 30-year loan of $800,000 from Bank of Little Rock Mortgage Corp.

The residence previously was linked with an August 2014 mortgage of $625,000 held by Bank of Little Rock Mortgage.

Magnuson purchased the location in February 2013 as part of an $186,000 deal with Steve Wortman.

Prospect Home

A 3,850-SF home in Little Rock’s Prospect Terrace neighborhood sold for $875,000.

William and Corinne Beck acquired the house from the Stamp Revocable Trust, led by Stephen and Patricia Chaffin.

The deal is funded with a 30-year loan of $831,250 from SunTrust Mortgage Inc. of Richmond, Virginia. The residence previously was used to help secure a September 2011 mortgage of $1.9 million held by First Security Bank of Searcy.

The trust bought the property for $916,000 in August 2005 from James and Donna McDonald.

Rural Residence

A 5,099-SF home in the Virginia Downs neighborhood of west Pulaski County changed hands in an $815,000 transaction.

Jon and Kricia Palmer purchased the house from Bryan and Christie Yarnell.

The deal is financed with a 30-year loan of $417,000 from Bank of Little Rock Mortgage and a 15-year loan of $315,585 from BancorpSouth Bank of Tupelo, Mississippi.

The residence previously was tied to a May 2015 mortgage of $395,500 held by Simmons Bank of Pine Bluff.

The Yarnells acquired the property for $715,000 in June 2011 from John and Jill Childers.

Orle Abode

A 4,871-SF home in the Orle neighborhood of west Little Rock’s Chenal Valley development rang up a $725,000 sale.

Matthew and Kristin St. Clair bought the house from Chad and Lindsay Wilkerson.

The deal is backed with a 30-year loan of $540,000 from Arkansas Federal Credit Union of Jacksonville. The residence previously was linked with an October 2009 mortgage of $753,601 held by Jim Bottin.

The Wilkersons purchased the property for $759,000 in August 2009 from Wilson and Barbara Hatfield.

Chimney Rock House

A 5,876-SF home in North Little Rock’s Chimney Rock neighborhood drew a $510,000 transaction.

Jason and Ashley Mounts acquired the house from Michael and Rhonda Marlar. The deal is funded with a 30-year loan of $408,000 from Bank of Little Rock Mortgage.

The Marlars bought the residence for $600,000 in January 2003 from Alvin Schultz.

Suite Funding

The owner of an 80-room hotel in west Little Rock picked up a $5.25 million funding agreement.

Chi Development Co. LLC, led by Jasen Chi, received the five-year loan from U.S. Bank of Cincinnati to improve and refinance the Candlewood Suites Extended Stay Hotel.

The 1.43-acre development at 10520 W. Markham St. previously was tied to a December 2010 mortgage of $3.7 million held by IberiaBank of Lafayette, Louisiana.

The former Shoney’s restaurant location was purchased for $640,000 in March 1998 from RBR Enterprises Inc., led by Carl Ricker.

Office Mortgage

A 4,920-SF office building in downtown Little Rock was used to secure a $2 million funding agreement.

TMG Properties LLC, led by Larry Hale, Robert McLarty and Paul Neaville, obtained the one-year loan from First Security Bank.

The 0.24-acre development at 1000 W. Third St. also is linked with an April 2014 mortgage of $332,521 held by the bank.

TMG bought the property for $385,000 in November 2009 from the William J. Walker & June Walker Revocable Trust.

Proportionally, no other Arkansas bank committed more to its loan loss reserves during the first quarter than DeWitt Bank & Trust.

The $118.7 million-asset lender’s allocation of the equivalent of 6.63 percent of total loans to its loan loss reserves ranked the highest among 104 banks.

That dedication to potential loan losses has no correlation to DeWitt Bank’s profit picture. The Arkansas County lender generated consecutive annual profits throughout the post-2008 era.

Nor does the level of loan loss reserves have any connection with its noncurrent loans. The bank recorded a measly $26,000 in nonaccrual loans in its March 31 call report.

That super-low number produced another No. 1 for the bank: the highest loan loss allocation relative to nonperforming loans: a whopping 9,415.38 percent.

While its current stance might be considered ultra-conservative, DeWitt Bank’s loan loss allocation topped 8 percent several times during the past 10 years.

Since 2006, total loans at the bank have fallen from a pinnacle of $78.9 million at Sept. 30, 2007, to less than $37 million as of March 31.

The big allocation to loan loss reserves is something that regulators suggested about 15 years ago, said David Jessup, CEO of DeWitt Bank & Trust.

“That number today reflects an allocation that was made back then,” he said.

The Arkansas banks with the 10 highest ratios of loan loss allowance to total loans represent a broad spectrum of financial institutions, ranging from huge to small and profitable to unprofitable.

That broad assortment illustrates that, when it comes to reserving for loan losses, the equation varies from bank to bank.

“There is no set formula,” said Susannah Marshall, deputy bank commissioner. “But it has to be commensurate with a loan portfolio’s risk profile. It has to be tailored to that specific bank and that bank’s specific market.”

Determining that risk profile is open to interpretation at each bank.

“It is not objective,” said Reynie Rutledge, CEO of Searcy’s $4.9 billion-asset First Security Bank. “It is subjective. I follow the more conservative end. If you have a fault for too much loan loss reserve or too little, I want to fault on too much reserve.

“I’m not saying I have too much reserve. But I don’t want any surprises.”

First Security is among the biggest and most profitable banks based in Arkansas, and Rutledge isn’t shy about hedging against market uncertainties.

“If you end up with some unexpected loan losses, you have to dig deep and do a one-time allocation,” he said. “We put some money in loan loss reserves every month, and I hope I don’t have any unexpected problems. But if I do, I have them covered. ”

Among other billion-dollar banks in Arkansas, the closest to Rutledge’s 2.91 percent reserve is First National Bank of Paragould at 1.69 percent and Farmers Bank & Trust of Magnolia, 1.64 percent.

The two smallest loan loss reserve ratios among the state’s biggest banks are at Little Rock’s Bank of the Ozarks, 0.67 percent, and Pine Bluff’s Simmons Bank, 0.68 percent.

Loan Loss Reserve Ratios

^* In thousands. All numbers as of March 31.
Source: Federal Deposit Insurance Corp.

Another business holding of the Golden family has filed for bankruptcy protection.

Allcorp Inc. of Little Rock, which owns the $16.9 million-asset Community State Bank of Bradley (Lafayette County), filed for Chapter 11 reorganization late Wednesday.

The initial filing in the U.S. Bankruptcy Court for the Eastern District of Arkansas contains few details. It lists Allcorp’s assets at between $1 million and $10 million. The same range is used for the debts.

Allcorp’s bankruptcy attorney, Stanley V. Bond of Fayetteville, said on Thursday that the bankruptcy happened suddenly and he didn’t have many specifics on the case.

Community State Bank is currently the smallest bank by assets chartered in Arkansas. But at least it’s profitable: net income of $323,000 in 2014 and $55,000 in 2015.

Alex Golden and his father, Lex Golden, acquired the bank through Allcorp in 2010. Alex Golden is listed as the president of Allcorp.

The Golden family also has control of Allied Bank in Mulberry.

Last week we told you in a front-page story that Lex and Ellen Golden recently were hit with a $2 million judgment in Yell County Circuit Court. Chambers Bank of Danville received the award in connection with the Little Rock couple’s personal guarantee of a delinquent loan to Acme Holding Co.

That case was one of many tied to the bankruptcy of Acme, the parent company of Allied Bank. Under the Golden family’s ownership and management, the bank has lost more than $14 million since 2010.

Acme Holding filed for Chapter 11 reorganization in 2014, and it was converted to a Chapter 7 liquidation a year ago. It listed total assets of $12.2 million and liabilities of $11.4 million.

That case remains open.

Arkansas Teacher Retirement System will receive a percentage of a $300 million class-action settlement it reached last week with its custodial bank in connection with overcharging fees.

ATRS is waiting on a U.S. District Court judge in Massachusetts to approve a formula to distribute the settlement money to class members, George Hopkins, executive director of ATRS, told Arkansas Business Monday. Hopkins said it was unclear how many class members there might be.

ATRS was the lead plaintiff in the case against State Street Corp. of Boston that was filed in 2011 in U.S. District Court in Massachusetts. 

ATRS alleged that State Street and some of its subsidiaries misled members of the class in connection with certain foreign currency exchange trades.

"We thought the fees were outside the market that we should have been charged for repatriation of dividends," Hopkins said.

He said it was difficult to determine how much ATRS was overcharged. "It was not some massive amount, but it was an amount we feel like a custodial bank should not charge."

U.S. District Court Judge Mark L. Wolf has to approve the distribution formula, which could take two to three months. 

Hopkins said ATRS started looking into the fees in 2010 after hearing news reports that retirement systems in other states questioned the fees with large custodial banks across the country.

The ATRS board agreed to file a class action lawsuit against State Street to recover those funds, Hopkins said. Labation Sucharow LLP of New York was the lead attorney in the case. 

The lawsuit hasn't ruined ATRS' relationship with State Street.

"We continue to have a good working relationship with State Street, although we objected to those fees," he said. "We're glad that case is settled, and we're putting that behind us and moving forward."

Watch the governor's address above.

Bear State Financial Inc. of Little Rock has partnered with two startups — LumoXchange of Atlanta and Monotto of Charleston, South Carolina — that participated in the first FinTech Accelerator program hosted by the Venture Center of Little Rock and global technology provider FIS of Jacksonville, Florida. 

The announcements were made during a demo day held Wednesday at the Clinton Presidential Library to end the 12-week program, which Gov. Asa Hutchsinson and FIS have agreed to continue through 2018. 

About 300 people attended the demo day to hear pitches from and see demonstrations by the 10 startups chosen to participate. The governor was the keynote speaker; and FIS CEO Gary Norcross also addressed the crowd.

LumoXchange, a low-cost remittance marketplace that will allow customers to compare exchange rates in countries across the world and send money online using local foreign exchange rates, is looking for a permanent location in Little Rock. 

Monotto offers a personal finance solution that automates the process of saving and investing and is designed for college students and millennials. 

Shelly Loftin, chief marketing officer for Bear State, said LumoXchange is "revolutionizing" how people send money to their loved ones in other countries. It offers, through a smartphone app and website, an alternative to using large companies, such as Western Union. 

The bank will help LumoXchange on the "back end," and the two will work together to build the network the startup needs, she said. 

"All of the promotion and branding will be for LumoXchange because it's their vision and their company; we're just helping them with the infrastructure because we believe it's a really good cause and it's a really good business model," she said.

"It's not a monetary investment," she added. "It's an investment of people and back-end resources of a financial institution, so to speak."

Loftin said Monotto had developed an app that helps people save "automatically" and "seemingly in the background." The startup's original idea was to sell it directly to consumers, but Bear State helped convince the company to brand their platform for financial institutions and integrate it into those institutions' existing online and mobile software suites.

Loftin described Bear State as Monotto's "beta bank." The two will work together to figure out what the platform should look like, what the app should look like, what functionality it should have and needs and to work it into the set of products Bear State offers to customers.

LumoXchange and Bear State will be spending money on this project, but she said she couldn't disclose an amount of investment because neither knows how much will be needed yet.

Loftin said that Bear State would be contributing its expertise in marketing and financial literacy education, to the partnership as both spend money to build the technology. 

She added that Bear State was talking with about half of the accelerator teams about partnership and hopes to make some announcement related to those discussions by the end of the year. 

Arkansas Business will update this story.

WASHINGTON — Employers added a healthy 255,000 jobs last month, a sign of confidence amid sluggish growth that points to a resilient U.S. economy.

The Labor Department said Friday that the unemployment rate remained a low 4.9 percent in July. More Americans launched job searches, and nearly all were hired. But the influx of job seekers meant that the number of unemployed fell only slightly.

More: See the complete report here.

The figures suggest that U.S. employers shook off concerns about Britain's late-June vote to quit the European Union. Nor were they apparently discouraged by tepid growth in the first half of the year of just 1 percent at an annual rate.

Average hourly pay picked up and is 2.6 percent higher than it was a year ago, matching the fastest pace since the recession.

July's robust job gain may be enough to reassure investors — and perhaps Federal Reserve policymakers — that the economy will keep growing at a slow but steady pace. The economy slumped in the first half of this year, with an annualized growth rate of just 1 percent. Growth has been driven by consumers, who ramped up spending in the April-June quarter at the second-fastest pace since the recession.

That figure underscored the importance of strong hiring, which puts more paychecks into more pockets and supports greater spending. Many analysts expect the economy to rebound in the second half of the year, with one of the most optimistic estimates coming from the Federal Reserve Bank of Atlanta: It predicts that annualized growth will reach 3.7 percent in the current July-September quarter.

Public perceptions of the economy have been largely negative during this election season despite low unemployment. A top adviser to Donald Trump said last week that the annual economic growth rate of just 1.2 percent in the April-June quarter was "catastrophic."

Hillary Clinton has tended to credit the Obama administration for rescuing the economy from the Great Recession but has also said "none of us can be satisfied with the status quo."

Overall, most recent economic data have been mixed. Americans are confident enough to step up home purchases, aided by near-record-low mortgage rates. Sales of existing homes reached a nine-year high in June, and sales of new homes accelerated to an eight-year high.

Services companies, which range from retailers to banks to shipping firms, expanded at a healthy pace in July, according to a survey by the Institute for Supply Management, a trade group. Their expansion slowed a bit from the previous month. But new orders picked up, a sign that growth could remain healthy.

But manufacturing continues to struggle and is weighing on hiring. Factories received fewer orders in June for a third straight month. Weak growth overseas and a stronger dollar have cut into many companies' overseas businesses. And auto sales have leveled off, according to data released this week.

The slowdown in manufacturing has cost jobs: Factory employment has fallen about 30,000 in the past year, depriving the economy of key middle-income positions.

Job growth has been stronger in higher-income occupations, such as managers, engineers and accountants. Lower-wage jobs at hotels, restaurants and retail stores have also grown at a healthy pace. Both trends add to a long-running dynamic that has caused hiring for middle-income jobs to lag behind hiring for high- and low-paying positions.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

A radio report about the importance of having a will grabbed our attention last week. The report noted that more and more people are recording “ethical wills” for posterity, stories of their life and their thoughts about their values and the legacies they want to leave behind — “what it is you want people to remember about your life and what you think is important.”

All of which segues perfectly into this week’s issue with its stories about Arkansas’ business icons and the $15 million donation to Arkansas Children’s Northwest hospital, the largest in the history of Arkansas Children’s Hospital. The Tyson family and Tyson Foods joined together to make the gift, the largest in what has become a series of million-dollar and multimillion-dollar pledges from northwest Arkansas benefactors and businesses that now total $45.5 million. Lives will be saved once this hospital is built.

The state’s business icons also have been generous with their gifts, financial and personal, making Arkansas immeasurably richer. Some have given to traditional worthy causes: health care, education, the arts. Alice Walton and the Walton family have created a remarkable cultural landmark and economic driver in Crystal Bridges Museum of American Art, open to all without charge because of a $20 million gift from Wal-Mart.

Some, like Johnny Allison, take pride in having used their gifts to enrich others. His talent for banking has been “extremely rewarding to me because we’ve made so many people wealthy. We’ve educated kids, we’ve paid off homes, we’ve secured retirement for hundreds and hundreds of Arkansans.”

Even among Arkansas Business’ largely affluent readers, few have the resources to make million-dollar donations, but many of our readers are business owners and employers, and every job they provide supports an individual or a family.

So what do you want to be remembered for?

I don’t know how else to say this: If you don’t enjoy this issue, you really don’t have any business reading Arkansas Business. We’ve had some fun issues in the past — I’m especially proud of our 25th anniversary issue from 2009, when we rounded up 25 scoundrels and 25 mysteries and 23 other lists. But we’ve never done an issue quite like this one, with so many interviews and so much insight into 10 of the most iconic businesspeople living in Arkansas today.

The lists we do routinely — largest banks, largest accounting firms, the list of the state’s oldest companies in issue — are ranked by some objective measure. But we also do more subjective lists, like the annual 40 Under 40 project in which we introduce our readers to 40 deserving young leaders in business and government. Deciding which individuals to feature as “business icons” was a similarly subjective exercise, and the staff started to think of these stories as a way to acquaint younger readers with the personalities behind some of the most familiar names in our state’s business community.

But a funny thing happened on the way to the printing press: Those of us who thought we knew Bob Shell, Johnny Allison, Walter Hussman and the rest discovered new facts and gained new understanding of what makes them tick. I’m pretty sure you will too.

• Johnny Allison
• Wallace Fowler
• George Gleason
• Johnelle Hunt
• Walter Hussman
• Jim Lindsey
• Reynie Rutledge
• Bob Shell
• Warren Stephens
• Alice Walton

After the financial crisis, new regulations sought to address systemic risk within the U.S. financial system, including rules addressing capital requirements, liquidity ratios and leverage levels. Even with the enactment of the Dodd-Frank Act, which has yet to be fully imposed, debate continues on whether “too big to fail” remains an issue or whether the risk to the economy has been mitigated.

Among those who still see a key problem, proposals to address the issue range widely. Symposiums held at the Minneapolis Fed explored several of these ideas. Here is a brief overview.

Some researchers, such as Simon Johnson from MIT, have suggested limiting bank size. Others, such as Anat Admati from Stanford, have suggested much higher capital requirements for large banks. A third proposal, by John Cochrane from Stanford, emphasizes changing the treatment of leverage in the tax code. A fourth proposal seeks to improve the bankruptcy laws in a way that will allow troubled financial firms to more readily go through bankruptcy. While this idea has caught attention, it is fraught with technical complications. So I will focus on the first three ideas.

Bank Size Limits: I have advocated a system with smaller financial institutions that can be allowed to fail if necessary. But size restrictions seem arbitrary. Why should a particular bank size be risky and another size not? In addition, recent evidence suggests that substantial economies of scale exist, perhaps even for the largest financial institutions. And the primary concern could be that complexity or interconnectedness is the trigger of financial fragility rather than size itself. For these reasons, some analysts have concluded that a size restriction alone may not be the most natural solution.

High Capital Requirements: Raising capital requirements for large institutions is emphasized in the Dodd-Frank Act. The idea is that higher capital requirements offer a larger buffer to absorb shocks, reducing institutions’ risk of failure. Admati argues that capital requirements should be even larger, making equity capital levels more comparable to those of nonbanks. Researchers point out that banks had much higher levels of capital in earlier eras when owners and shareholders were personally liable for paying banks’ creditors. This suggests that the market solution is to have banks hold more capital than they do today.

Comments by Fed Gov. Jerome Powell and other officials suggest that higher capital requirements may cause firms to rethink their size. Some large firms, such as GE Capital, have divested to avoid being designated as systemically important within the Dodd-Frank Act, a designation that can lead to higher capital requirements.

Leverage: Many have suggested that leverage — not capital — is the issue, in which case Cochrane’s proposal to rethink the tax treatment of leverage might be a good idea. Keep in mind the “tech” bubble in the late 1990s and early 2000s, when firms had to raise their financing through equity. Although investors lost money when the market crashed, the repercussions for the economy were not as significant as the housing bubble crash several years later. The U.S. tax system favors bond financing: Interest payments on debt instruments are tax-deductible, while dividend payments to shareholders are not. A less favorable tax treatment for bond financing and a more favorable treatment of equity financing might add stability.

These are interesting ideas, but there is also a global aspect. In particular, we have seen efforts on a global level to limit systemic risk through coordinated regulatory policies across countries. In my experience, however, other countries often seem to be less concerned about Too Big to Fail as an issue than we are in the U.S. There is sometimes a tendency to view large financial firms as national champions, deserving of protection. In part because of this, we are evolving globally toward a regulated utility model — whereby very large financial institutions are under heavy regulation, which in my view makes them unlikely to innovate effectively in the future. This may leave them vulnerable to coming waves of financial innovation. This is an additional consideration in the ongoing Too Big to Fail debate.

This commentary is reprinted with permission from The Regional Economist, a publication of the Federal Reserve Bank of St. Louis, where James Bullard is president and CEO.

The Arkansas State Bank Department has given preliminary approval to an application for a change of control at First State Bank of Russellville, one of the final pieces in the estate plan of the late William H. Bowen, the legendary lawyer and banker who died in November 2014 at age 91.

Bowen’s stock in the bank holding company, First State Banking Corp., is being transferred to a trust controlled by his three children, including Cynthia Blanchard, whose husband, Charles Blanchard, is chairman and CEO of the bank.

The Blanchard and Bowen families control more than 60 percent of the stock in the holding company, Charles Blanchard told Whispers.

First State Bank had $230.5 million in assets as of June 30. It earned $2.24 million in 2015 and reported net income of $1.29 million in the first two quarters of 2016, an improvement of almost 19 percent from the first half of 2015. Equity capital stood at $25.9 million at mid-year.

“We’re just now getting the estate wrapped up and transferred into the three trusts,” he said. Otherwise, nothing at the 82-year-old bank will change.

“No changes in management, no changes in locations. We anticipate, at least through my lifetime, being as we are,” Blanchard said.

That includes the name. The number of First State banks in Arkansas has dwindled from eight to five in the past 15 years, but Blanchard says he’d be happy to be the last First State Bank.

“That’ll save us the expense of having to find a new name.”

Whispers also checked in with Marnie Oldner, CEO of Stone Bank in Mountain View, about its change of control application filed last week.

It too is just asset planning by J.T. Compton and family, the bank’s primary shareholders, Oldner said, and does not represent new ownership or any change in the operation.

WASHINGTON — Long-term U.S. mortgage rates edged higher this week, though rates remain at historically low levels.

(Copyright 2016 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

A 35,000-SF building in west Little Rock tipped the scales at $4.38 million.

EAI Realty Inc., an affiliate of Education America Inc. of Heathrow, Florida, sold the former home of Remington College at 19 Remington Drive.

The buyers are Remington Partners LLC (53.7 percent) and Burlingame Investments Holdings LLC (7.1 percent), both led by Isaac Smith; Tulsa May’s LLC (33.6 percent), led by Kevin Huchingson; and Once LLC (5.6 percent), led by Mark Bentley.

The deal is financed with a seven year loan of $3.1 million from IberiaBank of Lafayette, Louisiana. The 4.6-acre location was purchased for $825,000 in December 2002 from Boen Enterprises LLC, led by Leonard Boen.

Corporate Purchase

A 21,732-SF office building in west Little Rock weighed in at $2.04 million.

Checkk Properties LLC of Texarkana, Texas, bought the Corporate One Building at 10025 W. Markham St.

The sellers are John and Karen Flake and Stephanie Kelley, $1.39 million; Kelley Commercial Realty LLC, led by Hank Kelley, $586,000; and the Flake Family Trust, $64,826.

The 1.84-acre development previously was tied to a February 2002 mortgage of $685,000 held by Delta Trust & Bank of Little Rock.

Ownership of the project shifted in a $950,000 transaction with Corporate One Partnership in February 2000.

The original investment group was composed of James Summerlin and Vernice Wright, 41.9 percent; Pat Morrison, 18.7 percent; Gary Dean, 17.5 percent; Jim May III and Lewis May, 10 percent; John Flake, 7.5 percent; and Wingfield Martin, 4.4 percent.

Charter Acquisition

The future home of an elementary and middle school in east Little Rock rang up a $1.7 million transaction. EStem Public Charter Schools Inc., led by John Bacon, acquired the 111,096-SF warehouse at 400 Shall Ave.

The seller is Central Arkansas Area Agency on Aging Inc., led by Luke Mattingly.

The agency bought the 3.7-acre development for $1.98 million in March 2003 from Walk-Winn Plastic Co., led by Tommy Walker.

Archild Buy

A 40,143-SF facility in west Little Rock changed hands in an $880,000 sale.

Archild Inc., led by Marti Dush, purchased the 7723 Col. Glenn Road project from the namesake living trusts of Atley G. Davis and Betty Davis.

The Davis family has owned the 4.02-acre property for more than 60 years.

KFC Transaction

A 2,400-SF KFC in west Little Rock drew an $839,000 transaction.

Tabbassum Mumtaz bought the 100 Markham Park Drive project from Markham Park LLC, led by Graham Smith.

The deal is funded with a seven-year loan of $587,300 from Little Rock’s Bank of the Ozarks.

The 0.68-acre development previously was linked with a May 2015 mortgage of $484,000 held by the bank.

Markham Park purchased the property for $650,000 in February 2013 from the H.C. Schmieding Produce Co. Inc. Profit Sharing Trust and Schmieding Foundation Inc.

Sologne Manor

A 6,793-SF home in the Sologne Circle neighborhood of west Little Rock’s Chenal Valley development sold for $1.03 million.

Srinivasan Ramaswamy and Roopa Ram acquired the house from Bennett and Jacqueline Lebow.

The deal is backed with a 15-year loan of $820,000 from One Bank & Trust of Little Rock.

The Lebows bought the residence for $1 million in August 2008 from Marian James.

Shady Valley Abode I

A 6,835-SF home in North Little Rock’s Shady Valley neighborhood is under new ownership after an $899,999 deal.

Jeffrey and Leslie Smith purchased the house from Gregory and Delinda Harrington.

The residence previously was tied to an August 2015 mortgage of $787,000 held by IberiaBank.

The Harringtons acquired the location for $66,000 in January 2005 from Alvin and Anne Eanes.

Shady Valley Abode II

A 6,456-SF home in North Little Rock’s Shady Valley neighborhood rang up a $660,000 sale.

The Morden Revocable Trust, led by Billy and Linda Morden, bought the house from Mike and Janet Huckabee.

The residence previously was linked with a December 2010 mortgage of $299,800 held by Primary Residential Mortgage Inc. of Salt Lake City.

The Huckabees purchased the property for $525,000 in July 2006 from Jerry and Billie Neal.

Oaks Residence

A 3,300-SF home in The Oaks neighborhood of west Little Rock’s Chenal Valley development changed hands in a $635,000 deal.

Robert and Debra Fehlman acquired the house from Rick and Jill Willey.

The deal is financed with a 15-year loan of $345,000 from Simmons Bank of Pine Bluff.

The Willeys bought the residence for $485,000 in May 2001.

The seller was Lewis Home Builders Inc., led by Jon Lewis.

Heights Home

A 2,814-SF home near the Country Club of Little Rock drew a $555,000 transaction.

KJR Holdings LLC, led by Spencer and Molly Keith, purchased the house from Steven and Rhonda Napper.

The residence previously was tied to a January 2015 mortgage of $375,000 held by First Financial Bank of El Dorado.

The Nappers acquired the location for $125,000 in January 2002 from the Norma C. Thompson Revocable Living Trust.

Miramar House

A 3,918-SF home in the Miramar Place neighborhood of west Little Rock’s Chenal Valley development sold for $525,000.

Adam and Alicia Fernandez bought the house from Michael and Adena Jenkins.

The deal is funded with a 30-year loan of $417,000 from Simmons Bank. The residence previously was linked with a May 2014 mortgage of $175,000 held by First Federal Bank of Harrison.

The Jenkins family purchased the property for $525,000 more than two years ago from Arbor Construction LLC, led by Mike Moran.

Estates Sale

A 4,182-SF home in the Maumelle Valley Estates neighborhood is under new ownership after a $517,300 deal.

Jill and Christopher Hughes acquired the house from Greg and Miranda Simmons.

The deal is backed with a 30-year loan of $413,840 and a five-year loan of $77,595 from IberiaBank. The residence previously was tied to October 2013 mortgages of $417,000 and $43,000 held by the bank.

The Simmons family bought the location for $72,000 in January 2013 from Maumelle Valley LLC, led by Gilbert Carpenter.

Hillcrest Residence

A 2,918-SF home in Little Rock’s Hillcrest neighborhood rang up a $505,000 sale.

Christopher and Madina Lawlis purchased the house from RTR Investments LLC, led by Matthew Lewis.

The deal is financed with a 10-year loan of $506,096 from Simmons Bank. The residence previously was linked with a July 2015 mortgage of $375,000 held by Malvern National Bank.

RTR acquired the property 13 months ago for $255,000 from Susanne Roberts.

Innovative Construction

Construction of a medical office building in west Little Rock is backed with a $5.1 million funding agreement.

Innovative Real Estate LLC, led by Majid Saleem, obtained the 11-year loan from Bank of America in Charlotte, North Carolina.

The limited liability company bought the 2.53-acre site at 11220 Executive Center Drive for $500,000 in January from the Arkansas Realtors Association, led by Mikki Bass.

Unemployment rates rose slightly in Arkansas metro areas in June, but rates are still lower than a year ago, notes Michael Pakko, chief economist at the Institute for Economic Advancement at the University of Arkansas at Little Rock.

The U.S. Bureau of Labor Statistics reported earlier this month that unemployment rates were lower than a year earlier in 285 of the nation’s 387 metropolitan areas, “and all eight metro areas that cover parts of Arkansas were in that total,” Pakko said on his Arkansas Economist blog.

Year-over-year changes ranged from a decline of 0.7 percentage point in Fort Smith and Texarkana to a drop of 1.6 percentage points in Pine Bluff.

The chart “Payroll Employment in Arkansas MSA” illustrates the trends of Arkansas’ metro areas since the 2008-09 recession. “Fayetteville, Jonesboro and Little Rock are the only three metro areas to have higher employment now than at the end of 2007,” Pakko said.

Unemployment Rates in Arkansas MSAs - June 2016
(Not Seasonally Adjusted)

I trained for facilitation work in the lineage of Sam Kaner, the author of “Facilitator’s Guide to Participatory Decision-Making.” Kaner’s company, Community at Work, stresses consensus in all decisions.

Both conventional wisdom and the company name might indicate that Kaner’s work and research are aimed at the nonprofit sector. But his company has served the likes of Charles Schwab, Hewlett-Packard, PricewaterhouseCoopers and Visa. Facilitators trained in Kaner’s methods, myself included, have worked in business entities large and small on every continent on the globe. While his is a technical methodology for professional facilitators, all leadership requires some capacity to facilitate groups and teams to get work done.

Mainstream, action-oriented leadership thinkers tend to hate the idea of consensus, opting instead for rapid-fire, quick-decision meetings. The efficiency of pushing quickly for a clear path forward is hard to resist; however, it often steps over or forces underground the kind of resistance that will kill a new idea or initiative — but usually not until most of the time and money are spent.

Consensus is really hard and it means everyone has to agree, which is all but impossible. Striving for consensus is, however, a worthwhile and high-value investment in time. The discussions needed for those who are doubtful or uncomfortable with a potential strategy or new direction reveal critical information that might otherwise not be taken into account. Taking the time in the ideation and planning stages allows valid concern and even open opposition to have a voice. So why, if I am clear about a project or strategy that I want to get off the ground, would I want to provide time and attention to those I may view as worrywarts and naysayers? Here are my top five reasons:

♦ Risk mitigation. Time spent fully developing the list of things that could kill a project is foundational to building a risk mitigation plan.

♦ Stakeholder management. People who feel they have no voice are likely to become either passive or overtly oppositional, neither of which moves the initiative forward.

♦ Conversion opportunities. While you cannot count on it, the folks who most strongly oppose an initiative can become its staunchest supporters — if they feel their concerns have been heard and addressed.

♦ Shine a light. The conversations are going to happen. Better to have them in the meetings where they can be vetted and handled rather than in the hallway “meeting after the meeting” that consists of only the naysayers.

♦ Better decisions. When it is time for the leader to make a decision, she will have heard all points of view and have a better idea of what will be needed to bring the strategy about or the project over the line.

Pat Lencioni describes this process in his landmark book “The Five Dysfunctions of a Team.” During the team offsite, the new CEO exclaims clearly that “consensus is horrible.” Noting that if everyone does not agree at the beginning, consensus devolves into a never-ending attempt to please everyone, something that (assuming it is even possible) usually waters down any project until it is useless.

And he is right. If everyone were fully onboard, there would be no need for the project or the meeting. Consensus is about addressing the concerns on the team to a point that they are manageable and those involved can fully commit, despite reservations and concerns. As Lencioni puts it, “disagree and commit.” This is a critical distinction. Consensus is not about getting full agreement on every point in a plan. It is about fully engaging and, where possible, addressing the concerns of those whose commitment is required so that the team can create a sustainable and powerful commitment.

Whether the issue at hand is a major project, a new strategic direction, a simple process change or a cultural decision that impacts the entire team, stepping over the open debate invites dissenting points of view, and looking for accommodation will send naysayers underground and out into the hallway to be heard. And when it comes to organizational change, resistance is anything but futile.

I. Barry Goldberg is a credentialed executive coach and Vistage chair, hosting peer advisory groups for owners and senior executives in central Arkansas. You can reach him at Barry.Goldberg@EntelechyPartners.com.

Donna Townsell has been promoted to director of marketing for Centennial Bank of Conway, and Eric King has been named senior business development officer.

Townsell is a nine-year employee of the bank, and her most recent assignment has been managing corporate efficiencies. She earned a degree in marketing from the University of Central Arkansas.

King joined Centennial in 2007 and has served as a lending officer, public relations officer and most recently as vice president and marketing manager.

Charitti Sullinger has joined Centennial Bank in Paragould as a mortgage loan originator. She has more than 18 years of experience in mortgage lending and insurance sales.

A graduate of Arkansas State University at Jonesboro, Sullinger is licensed to sell life and health insurance.

Brooks Aitchison, Audrey Laughlin and Kimberly Pierson were recently promoted to senior associates at PriceWaterhouseCoopers of Little Rock. In addition, Chad Reed and Andrew Taylor have been promoted to senior managers at the firm.

See more of this week's Movers & Shakers, and submit your own announcement at ArkansasBusiness.com/Movers.

(A correction has been made to this column. See end for details.)

Last week, the Washington Post published, in an impressively interactive online version, a story about a 2007 deposition of Donald Trump in which the future Republican presidential nominee was forced to admit under oath that lots of things he had said publicly weren’t true.

His net worth, his ownership stake in various enterprises, how much he was paid in speaking fees, even things he claimed other people did or said — all just hooey, and he acknowledged it and didn’t seem to care. Trump’s relationship with the truth is sort of like my relationship with the periodic table: I have a general idea of what it is and I know it’s very important, but it’s not really something I consider in my day-to-day decision-making.

Now, I can’t imagine a worse choice to perform the duties of president of the United States than Donald Trump. But if he’s still on the ballot come November, he’s going to win Arkansas’ electoral votes in a cakewalk, so my opinion on his fitness for office is beside the point.

But that Washington Post story was a reminder of just how much fascinating, important and/or newsworthy information is sitting out there in the millions and millions of court files all over this country. Especially in the civil files, which tend to get less media attention than criminal charges.

Arkansas Business routinely mines court documents for stories. That’s how Mark Friedman, the senior editor who covers law and health care, got his award-winning scoops on the Mountain Home doctor, Stacey Johnson, who defrauded Medicare of nearly $15 million before he died and on the curious strategy used by John Goodson and friends to get a self-serving class-action settlement approved in Polk County Circuit Court. Civil court records (and 30 years of source development) have allowed Senior Editor George Waldon to report on the curious auction of Dunklin family property in southeast Arkansas and on the series of frauds that creditors and investors have alleged against John Rogers of North Little Rock.

Sometimes I even get in on the act. Depositions in a North Carolina civil suit were the basis of my 2015 story exploring the international fraud that ensnared the former president of a small Little Rock credit union, Joyce Judy.

But finding that stuff, assessing its news value and then distilling it into a readable, informative news story is labor-intensive craftsmanship. There were never enough skilled craftsmen to ferret out all these worthwhile stories, and now there aren’t nearly as many as there used to be. (The declining number of hard news reporters was the subject of a tragicomic episode of John Oliver’s HBO series “Last Week Tonight” on Aug. 7.)

Of course, court files aren’t the only places where news is lying around unharvested. Without a tipster, Friedman wouldn’t have known to request emails that state Auditor Andrea Lea instructed her staff to send to her private email account. (We’ll never know what was contained in the emails Hillary Clinton deleted, or on the hard drives destroyed by Mike Huckabee when he left the governor’s office.)

A tipster prompted the internal audit that uncovered the deeply disappointing, and possibly illegal, behavior that led Tim Hudson to resign as chancellor of Arkansas State University’s flagship campus at Jonesboro. Otherwise, he might have continued manipulating job openings for his wife’s benefit and using his position to try to get tuition discounts for his daughter. (If someone with household income of roughly $400,000 a year, plus a provided house and vehicle, can’t afford to send his kid to college, what hope do the other 99.5 percent of Arkansans have?)

This keeps me awake at night: The knowledge that there are important stories of value and interest to my readers, or of importance to our community or our country, that aren’t being reported because news organizations don’t know about them and there might not be enough warm bodies to do the work even if we did.

In John Oliver’s segment, he included a clip of David Simon, the former journalist who went on to create HBO’s “The Wire” series, worrying about the same thing.

“The next 10 or 15 years in this country are going to be a halcyon era for state and local political corruption,” Simon said. “It’s going to be one of the great times to be a corrupt politician. I really envy them. I really do.”

Keep those tips coming anyway, folks.

(Correction, Aug. 15, 2016: Dr. Stacey Johnson practiced in Mountain Home. His hometown was incorrect in the original version.)

Gwen Moritz is editor of Arkansas Business. Email her at GMoritz@ABPG.com.

Once upon a time, homeowners thought it was perfectly fine — smart even — to carry greater debt on their houses and take out the equity as cash for investments.

Ten years ago, Arkansas Business assessed the trend, topping the article with a playful headline about betting the house. Arkansans were getting second mortgages, home equity lines of credit and 100-percent mortgages on new homes, all to provide a seemingly magical cash pool for playing the market. Some were paying off existing mortgages as slowly as possible.

After all, interest rates were low, homebuyers were eager, and everyone knew that housing could never decline in value.

Well, that last part turned out to be a fairy tale.

American housing prices peaked in 2006, the year that story was published, and waves of foreclosures spurred the housing bubble’s big burst in 2008. The resulting crash in the subprime mortgage, collateralized debt and banking markets spawned the greatest financial crisis since the Great Depression, and the country still hasn’t fully recovered.

Money managers and homeowners got the message, and leveraging home equity for wealth-building is far rarer now, though some practices are still common on a smaller scale.

“I am struck by what we were like 10 years ago, like lemmings about to go off a cliff,” said Rick Adkins, president and CEO of Arkansas Financial Group Inc., the Little Rock investment advisory firm. “We were blissfully ignorant and just thinking about return.”

Adkins had been interviewed for that 2006 article, as was Leonard Hasson of Mann Hasson & Co. certified public accountants in Little Rock. The view from Hasson’s rearview mirror is the same as Adkins’.

“It was a fool’s game.” Hasson said. “Everybody back then was buying everything they could get, and people even borrowed money to invest. Things have shifted 180 degrees. Now it’s much more conservative.”

Not only is home equity less likely to be leveraged for investing, but many Arkansans are eagerly paying down their debts, said Rod Beckham, president of First Financial Mortgage in Little Rock. He, too, was quoted in the original story.

“Average buyers today are much more comfortable in the notion of having a good equity position in their home,” Beckham says now.

Beckham, Adkins and Hasson all believe the housing market is stable now, and that owning a home is still a great investment.

But the thinking 10 years ago was that a home seller could use a fraction of the proceeds to put 20 percent down on a new house and plow the remainder — say $100,000 — into the stock market, hoping for an annual return rate of 10 or 12 percent while paying 5 percent or less on the mortgage. That $100,000 would become $340,000 over 15 years at an annual return rate of 10 percent.

Today’s consumers, however, realize they may not get such a high investment return.

“People are starting to wonder if we’ll ever have a good year again,” said Adkins, a former adjunct professor of finance at the University of Arkansas at Little Rock and a regular columnist for the Journal of Financial Planning. “Two years ago we had a negative return, and last year there wasn’t much growth. This year it may be 3 percent. Folks who still think they’re going to get 12 percent a year have to realize that markets overall are not delivering those kinds of returns.”

Beckham said that even with today’s very low mortgage rates (3.4 percent on average nationally in July, according to Freddie Mac), “we see that buyers selling a current home and buying another are more likely to put all the proceeds from the sale into the new purchase. In many cases even additional funds are put toward the purchase from savings.”

That caution can be good, especially as homeowners age, Adkins said. “I guess as I’ve gotten older, I’ve started thinking what might happen. It’s one thing to have a heart attack in your living room, and another to have one when you’re driving 70 miles an hour down the freeway, or standing 20 feet up on a ladder.”

He said now that people have seen the damage from the housing bubble, they know they don’t want to be up on that metaphorical ladder when disaster strikes. “Low interest rates offer an opportunity to pay down debt, and people who have less stress and are happiest in retirement will be those with no debt. But as human beings, we make decisions on a transactional basis. We don’t look at things holistically.”

Psychological Scars

Victor Ricciardi, a finance professor at Goucher College in Baltimore and co-editor of “Investor Behavior: The Psychology of Financial Planning & Investing,” said the crisis of 2008 indeed left psychological scars.

“People suffer from an anchoring bias in which the financial crisis serves as a negative event,” he said. “This detrimental event reduces individuals’ appetite to endure high levels of risk, or accept new debt obligations such as a large mortgage loan.”

Rick Adkins pointed out another major difference between the mortgage climate today and 10 years ago: Now, once again, borrowers must prove they have the means to repay loans, and second mortgages are even more closely scrutinized. “Refinance is a whole new world,” Adkins said. “Documentation is asked for and verified. There were just so many abuses.”

The sleight of hand used in mortgage dealings before the 2008 crisis is the stuff of legend, seen in movies like “The Big Short,” “Too Big to Fail” and “Wall Street: Money Never Sleeps.” But those were the bad old days. “Now they don’t take your word for anything,” Adkins said. “They want documentation on income and assets, everything. They want proof.”

Some national observers have hinted at another housing bubble as the Federal Reserve continues its stimulus strategy of pumping money into the economy. And there are some exceptions to the tighter rein on borrowing here in Arkansas.

“We do see equity-out refinancing for various reasons such as investment property purchases, second-home purchases, paying for college or debt consolidation,” Beckham said. “Home equity financing is readily available at local banks in the form of second mortgages, and offered by most large aggregators of mortgages.”

Adkins said even 100-percent mortgages are starting to come back, but mainly for doctors coming out of medical training. He said that home equity credit is still possible, and that some borrowers, sadly, are misguided in how they use it.

“I was just at Disney World, and I know that some of the people I saw there were putting the cost of that trip — you know, $5,000 to take the kids there — right onto the credit card. And a lot of home equity still pays for things without lasting value. They’re spending on trips and merchandise. Again, the behavior aspect can be more important than hard, cold math.”

For that very reason, Hasson and Adkins were warning about the psychological dangers of cashing out home equity back in 2006 — the main behavioral risk being the temptation to spend.

As Hasson observed, some people were leveraging not to build wealth, but rather to in-crease their disposable income. Adkins described the availability of home equity cash as “financial heroin for some people.”

Ricciardi said that emotion often influences risk perception, and that extended levels of worry and fear might alter consumers’ tolerance for risk “over the long term.”

Millennials Missing Out

Hasson sees a downside to that, suggesting that far too few young people are buying homes, and thus missing an excellent way to build wealth early in life. “That’s the real pitfall I see now, that the millennial generation is not taking advantage of good values on existing homes and low interest rates,” he said. “They will blink an eye and will wish they had bought a home. The first ones in will definitely be glad, because interest rates won’t always be this advantageous.”

Noting that young people are saving and taking advantage of 401(k) retirement plans, Hasson said they should “step up to the plate” in homebuying. “When you don’t own a business, you can boil down wealth-building basically to two places: retirement plans and owning a home. Millennials are missing out on that second one.”

On the other end of life, Arkansans should reduce debt and plan for longer retirements, Hasson and Adkins emphasized. “Pay down your mortgage and invest in retirement plans,” said Hasson, who often suggests 15-year mortgages for clients who can make higher payments. “You don’t need appreciation to build equity when you’re making principal payments.”

Adkins said the keys to a comfortable retirement are managing consumption, spending less, saving more “and for some folks working longer.” But having the mortgage paid off can ease a worried mind. “What if the housing market caves in or interest rates shoot up again?” he asks. “What if your portfolio is suddenly worth a lot less and your cash flow drops? When that happens, disaster is in the air. And you don’t want to be 20 feet up on that ladder.”