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No doubt, the recent events in the financial markets are unprecedented. How could a small subset of the mortgage lending market, referred to as subprime, cause the overall credit markets to seize up and throw the economy into a tailspin? Economists, academicians and policymakers will devote much of the next year trying to answer that.

On the surface, the problem seems to be a lack of consistent regulation for all financial services providers. Note the word “consistent.” If you were to tell one of the 18,000 Iowans employed by an insured depository institution that they lack regulation, their reaction would be one of utter disbelief. They could quickly recite the number of hours each day they spend completing forms, paperwork and reports, taking scarce time and resources away from serving their customers.

Rather, the regulatory lapses occurred in mortgages originated through unchecked mortgage brokers, often packaged by overleveraged investment banks and approved by rating agencies blind to the credit risk. The resulting crisis was exacerbated by non-exchange-traded financial instruments, such as credit default swaps and other derivatives. In the end, it all lacked the transparency necessary for a well-functioning marketplace.

The Iowa real estate market has outperformed much of the rest of the country. Home sales have fallen less steeply, and home prices have actually risen. The vast majority of our home mortgages are fixed-rate prime loans, a testament to Iowa’s responsible lending community.

The Iowa banking industry is strong. Ninety-six percent of our financial institutions were profitable at the midpoint of 2008. Our average capital-to-asset ratio of 9.5 percent is well above the U.S. average, leaving a greater cushion to absorb unexpected credit losses.

The federal government has devised a series of programs designed to further strengthen the financial services industry and stimulate lending. Most prominent has been the U.S. Treasury Department’s Capital Asset Purchase Program, in which the department takes an equity position in banks to support further lending. Iowa banks want to support the economic objectives of the program but have good reason to be hesitant.

The Federal Deposit Insurance Corp. has also implemented programs to expand deposit insurance coverage and increase consumer confidence.

The hallmark of Iowa banking always has been local commitment and a strong personal relationship with customers. In addition to the billions in lending to businesses and consumers, Iowa bankers in 2007 donated nearly $40 million to community service organizations. They also volunteered more than 1.6 million hours of their time.

Iowans can take comfort in knowing their banks are strong and prepared to help them navigate these turbulent times.

John Sorensen is the president and CEO of the Iowa Bankers Association.