Oct. 6--Steve Fell measures his words when he talks about banking and economic conditions these days.

He's been in the local banking business since 1985, with Bank of America and National Bank of Arizona first. Then he moved to Bank One, which later became part of JPMorgan Chase.

So on the one hand he's in the middle of an industry in crisis that's part of an economy likely in recession.

But on the other hand, he's on a winning team.

Fell is the local market president for Chase, which is growing much bigger in the midst of the crisis, having gobbled up Bear Stearns in March and Washington Mutual about 10 days ago.

Fell is well-known in Tucson not just for his banking but also for his public involvement, which these days includes membership in the Tucson Airport Authority and the Southern Arizona Leadership Council, as well as the chairmanship of the Metropolitan Tucson Convention and Visitors Bureau.

Here are excerpts from a conversation with Fell on Friday:

Q What have you thought about the events of the last couple of weeks?

A Interesting to say the least. From our perspective, the way we look at things, right now we're more concerned about the recessionary environment than we are the liquidity environment.

That's because we have plenty of liquidity and plenty of capital. For those banks who do not have plenty of liquidity and plenty of capital, they're probably more concerned about getting liquidity.

Q What specifically concerns you about the recessionary environment?

A What worries me the most is the consumer, with house prices falling, car sales are down, retail sales are down. It looks to us like there's going to be a ripple effect through the economy from a consumer-spending perspective.

It depends on how deep that (recession) goes and how long we stay in it.

Q Is there any evidence of credit freezing up in the Tucson area?

A Not that I can tell. I don't see credit freezing up. I'm not familiar with other banks' balance sheets. We are not freezing credit. We have sufficient liquidity and capital in the market to handle those things.

I do believe that banks need to improve their capital position, so in order to do that they're going to have to increase pricing, reduce expenses, or both. So, I would expect increased pricing, through higher interest rates.

Q What are you advising your customers about what to do in this financial situation?

A We feel for the most part that clients need to be right-sizing their business from an expense position. We're talking to our clients about how they're going to handle certain situations.

Do they have any expansion plans in place? What do they see coming in the next year from their perspective? We're honing in a little bit more on how clients are managing their company.

Q What are some of the scenarios that are playing themselves out right now?

A Most businesses are seeing a decline in revenue.

But I will also say that most business owners that I have talked to are doing a wonderful job of staying ahead of that curve. I've been very impressed with the business people in Tucson so far. I think they've done a great job of recognizing the type of environment we're in and reacting to it.

They may be reducing expenses, they're cutting back their capital improvement budgets.

They might be looking to sell into different customers, expanding their customer base.

--Contact Business Editor Tim Steller at 573-4663 or at tsteller@azstarnet.com

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