LAYTON — Kelly Matthews can usually be found checking the stock market or making a prognosis of the economic situation.

But last week, the Bear Lake area Idaho native had a chance to reminisce about his days on a sheep ranch and dairy farm.

Wells Fargo Bank’s chief economist was the keynote speaker for the Utah Farm Bureau’s winter convention held at the Davis Conference Center, here.

“I appreciate agriculture very much, and appreciate those moments when I can still go to the auction and sell rams, or trim a sheep,” he told the several hundred attendees.

“It’s obvious the American people have spoken,” Matthews said of the past election. “Now we have a change in direction, with a new President, new Congress. It will mean increased regulation and oversight,” he predicted.

“Much of it is mere stupidity, greed and ignorance,” he said, of the economic crisis, that has impacted the housing market, caused the virtual collapse of Wall Street, and has seeped big time into the stability of America’s Big Three auto makers.

“If we are fortunate enough to work our way through it, it will occur in the next two to three years,” Matthews said.

“Whether we will be lucky enough to get back to some state of normality, or will regulation gradually move out or become ever more entrenched” is among questions that no one can answer today, he said.

“We were teetering on a very serious situation. We’ve moved away from the precipice,” he said.

And while $250 billion of the $700 billion bailout is being dispersed, positive impacts aren’t being felt immediately on Main Street.

A lot is hinging on arrival of the Obama Administration in mid-January, Matthews said. “That’s why no decision has been made on the auto bailout. Any bailout decision will wait until early December” when Congress reconvenes.

“The most probable outlook is that we will go through a difficult recession,” he said. “But I would suggest a year from now we will be doing considerably better. The outlook isn’t all rosy, isn’t without a huge disruption.”

But the “importance of a deflationary environment and a reduced amount of debt” is a concept people have relearned, Matthews said. “There was an incredible amount of aggressive lending, Wall Street leverage.

“Where possible, it’s very important to reduce debt, to build capital,” he said.

“It’s very difficult to get financing back. We’ve relearned that it does no good to give loans to someone who can’t pay them back. Any decent financial institution must be much more careful on determining risk.

“People were ignoring risk, asked for loans like money was free, that their land would bail them out,” he said.

Using Wells Fargo Bank as an example, he said “we expect borrowers to have some kind of down payment, with a reasonable respect to some equity participation, and a reasonable score for repayment of debts.

“There needs to be some evidence that borrowers will be able to make payments. I believe many banks are very anxious to have your business,” he told the farmers and ranchers.

tbusselberg@davisclipper.com