Last week (Feb. 13), the Commissioner of Texas Banking came to campus and spoke with the Texas Economics Association about ostriches. And by ostriches I mean banking. Seeing as banking is a sector that goes up and down with the broader economy, and being rather pessimistic about the current economic situation, I had myself braced for the worst. Then Mr. Randall S. James said it – that there are going to be “tons of business opportunities over the next few years in this state” and that there are currently not enough bankers to satiate the demand.

Analysis in the most recent Texas Bank Report reveals that 10 institutions outside of Texas account for more than half of the decline of earnings as a result of bad debts, that “none of our state-chartered banks report any significant problems or concerns relating to direct holdings of mortgages or investments in mortgage related products,” that Texas’ large trust companies can say the same, as can most Texan money service businesses. The hardest hit places, on the coasts and Nevada, as well as the “Rust Belt,” home to GM and Ford, have had serious slowdowns, and Mr. James sees Texas as the bright spot to which everyone is going to turn.

Not just in relative terms, Dallas and Houston are booming in terms of new jobs and population. Nobody need mention the success that the natural gas and oil companies have enjoyed in recent years, and as far as alternative energy goes, Texas has its fair share; Texas not only has three of the top five largest wind farms in the nation, but it accounts for two-thirds of wind energy growth in the United States, as per the American Wind Energy Association.

Though any good story needs a plot twist, right? It can’t be all sunshine and daisies? Mr. James is highly optimistic, and seems to have warranted reasons for his position. We all lived happily ever after, The End…

Though even those optimistic about Texas’ future will acknowledge a shameful truth – in fact it was the Commissioner himself that made me aware of it: Texas is 51st in the nation in terms of credit scores. In our defense, that list includes the District of Columbia, a place famous for fiscal responsibility. Now that is what I call a plot thickener: Texas banks may have a relatively large amount of capital, but Texas residents are on average the worst people in the nation to lend it to, making the average Texan less likely to get his or her hands on any of that capital.

Mention this at parties alongside a Ft. Worth Star Telegram finding from late 2005 that shows that only nine states have lower ratios of people per savings accounts, and that one in five Texans have a net worth of zero, and you’ll really be the downer that everyone goes out of their way to avoid.

This isn’t just about gloom trivia, so I’ll ask: what is the broader story to be told here? One could say that it’s all thanks to places like Brownsville and McAllen taking away from the boom, but it’s not just the poor ol’ Rio Grande Valley pulling down the successful metropolises. Both Dallas and Houston have credit ratings roughly equal to the atrocious state average. Could we say that this is an issue that may be increasing the disparity between the rich and the poor in Texas? Maybe. Does this prove that all of the stuff about growth in Texas is baloney? Unlikely, but it’s possible. There are lots of stories that can possibly be told here, lots of things that can possibly happen to the Texas economy in the years ahead, and hopefully I got some of you thinking about it. But I want to tell a different kind of story.

If people can’t get their hands on loans then there is a slowdown in the economy. When people can get their hands on loans and don’t pay them back, there is a slowdown in the economy. The recent sub-prime mess is proof of that. Even rampant economic growth doesn’t help if people overestimate what they can afford because of their new raise. It’s not always just about the amount of money in the system – we can’t neglect that the most important part about money is what individuals do with it.

Bill Bernanke, George Bush, Rick Perry, and Congress may make it easier or harder for you to get your hands on money, but are not directly fixing the problems in doing so. Rather, they are giving us the potential to fix the problem, and are banking on probabilities that we’ll actually fix it. Keeping one’s own finances in order and committing oneself to fiscal responsibility makes the uncertain future of the economy one person clearer.

-Vamsi Bhadriraju