One year after the bottom fell out from under the major Wall Street financial institutions, local community banking leaders are looking forward to grabbing a larger market share, while offering different perspectives on the actions the government took to prevent more large banks from failing in fall 2008.

"All the action the treasury undertook a year ago, I think it's quite clear that if they hadn't taken those steps, the financial system was on the verge of shutting down," said Bob Chapman, president and CEO of United Bancorp, the parent company of United Bank & Trust.

Government bailouts or assistance in facilitating the purchase of major institutions like AIG and Bear Stearns were meant to stop other large dominoes in the financial system from falling, and while the nation's banking system did stabilize, there were some unintended consequences, area bankers said.

One, according to Chapman, is the continuing poor functioning of the secondary market for loans. While traditional mortgages are still being purchased by Fannie Mae and Freddie Mac -- after the federal government propped those agencies up -- the market for so-called jumbo mortgages is hurting, he said.

Instead of originating and selling such loans, Chapman said, "you basically put it on your books."

That, in turn, prompts greater scrutiny of potential borrowers.

"Everything's getting more scrutiny today," he said.

Another result of the government bailouts, according to Peter Schork, one of the founders of Ann Arbor State Bank, is a two-tiered banking system in which larger institutions are too big to fail, but struggling community banks are allowed to go under.

"It's a system of winners and losers," he said. "That system is going to stick. There are going to be 15-20 giant banks, a bunch of regionals, and everyone else."

Schork added that the money spent on bailing out Bank of America, for example, could have had more of an impact on the economy if it had been spread out among many smaller banks.

"Many, many community banks would have survived with pieces of that money," he said.

Stephen Ranzini, president of University Bank, said the major change since a year ago has been that larger banks have cut back on their local lending staffs. That's essentially meant that Michigan has to go it alone, with local institutions having to make up for the loss of the larger players, he said. That, while it creates some opportunities for community banks, will eventually strain their capacity, Ranzini said.

"You can't withdraw 85 percent of the lenders and expect the remaining 15 percent to take up the slack," he said.

Looking back to a year ago, Ranzini said if the government had let more Wall Street financial institutions go under, it wouldn't have made much of a difference to Ann Arbor or Michigan.

"I don't believe it was necessary to rescue Goldman Sachs. It wouldn't impact our lifestyle here in Ann Arbor," Ranzini said. "If every Wall Street investment bank went out of business, it wouldn't change much in Michigan. They don't help us ... other organizations might fill the gap and be more amenable to the real economy."

He continued that the loss of some secondary markets may not be a bad thing -- getting back to the basics of funding companies that produce things is a more sustainable financial system than relying on packaged securities and derivatives, he said.

He said the difference is between a "buy and hold" mentality vs. "originate and sell." The latter, with its descent into complicated securities, was "flawed to the core."

"Should we be trying to fix the market for packaged-up loans?" he asked.

Still, even while criticizing some government actions of a year ago, Schork said it was undeniable that the result of preventing a complete collapse of the country's financial system was attained.

"If the main goal was to stabilize the banking industry, it worked," he said.

Freelance reporter Dan Meisler can be reached at danmeisler@gmail.com.