Colorado farmers say banking crisis hitting home
Associated Press Writer
Greeley, CO Colorado
GREELEY, Colorado – Colorado farmers and bankers on Tuesday told a congressional oversight panel that oversees the bank bailout that the banking crisis is threatening their livelihoods and they need banking standards that are better tailored to their businesses.
The panel met in Colorado’s agricultural heartland to hear from farmers and others who are struggling to get credit amid the economic downturn, and comes three months after Greeley’s New Frontier Bank collapsed, leaving many farmers unable to find lenders willing to give them vital operating loans.
“Our farmers don’t want a bailout, they want the ability to succeed,” said Les Hardesty, chairman of the Dairy Farmers of America Mountain Area Council.
Witnesses included Mike Flesher, executive vice president for Farm Credit Services of the Mountain Plains, Lonnie Ochsner, senior vice president for New West Bank, Marc Arnusch, owner of Mark Arnusch Farms, Michael Scuse of the U.S. Department of Agriculture.
Congress created the panel to hold hearings and issue a report on commercial farm credit markets and the use of loan restructuring as an alternative to foreclosure under the Troubled Asset Relief Program, the federal stimulus plan. The report is due July 21.
Damon Silvers, a panel member and attorney for the AFL-CIO, said the real stress test for banks is not the value of their assets, but their success providing credit to borrowers.
“If credit is not around to farmers, then we have not fixed our system,” he said.
Hardesty said the dairy industry is suffering and TARP funds should be used to buy up excess milk and cheese to provide to families in need.
Ochsner said federal stimulus funds are not the answer. He said bankers need to get to know their borrowers and their needs, like they do in the agricultural banking industry, and bankers should help them while maintaining proper banking standards.
“Strong operations survive, and unfortunately, some weak operations fail. Sometimes very honest, hardworking people fail, which is very disheartening. The biggest injustice of all is for a bank to lend people into insolvency, when good counsel may have helped them exit while they still had equity that could be salvaged,” he told the panel.
Loyal Gallatin, a Greeley contractor, told the panel that the federal government should provide alternative financial options for restructuring loans like those available to agricultural borrowers.
The U.S. Department of Agriculture issued a report in February saying Weld County is No. 8 in the country in the value of its farm and ranch products, with an annual market value of $1.54 billion.
U.S. Rep. Mark Udall, D-Colo., told the panel in a written statement that farmers across the state are suffering, but farmers and ranchers in northeast Colorado were dealt a double whammy when the New Frontier Bank failed, leaving many of them scrambling for new loans at other banks.
“This closure has had strong implications on access to credit locally and has had a rippling effect throughout this community,” Udall said.
New Frontier was closed on April 10, about four months after the FDIC issued a cease-and-desist order against the bank for “unsafe” and “unsound” practices. Defaults on the bank’s mostly agricultural loans left it with shrinking capital to cover potential losses.
The FDIC extended about $2 million in credit to agriculture enterprises so they could meet expenses as growing season looms.
Udall, who has held separate hearings on the crisis, said the bank failure created a need for about $700 million in agricultural loans that other lenders haven’t been able to provide.
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