By Jason Kosena
THE COLORADO STATESMAN
BRUSH — On Monday, U.S. Department of Agriculture Secretary Tom Vilsack heard pleas for federal help from Eastern Plains farmers who stand to lose everything as a result of the closure of Greeley’s New Frontier Bank.
Hundreds of frustrated family farmers lined up to tell Vilsack and the Colorado Democratic heavyweights who accompanied him about the financial pain caused by the closure of the bank, which specialized in agricultural loans and carried more than a third of the state’s farm loans and mortgages before failing last month.
Executives of the bank, which closed a month after the FDIC took it over, have warned borrowers that they must find new banks to take on their loans within 30 days. If no other banks will take the debt, the FDIC will be forced to liquidate the farm assets.
During a town hall meeting in Brush on Monday, more than 300 farmers told Vilsack and Democratic U.S. Senators Michael Bennet and Mark Udall, 4th Congressional District Rep. Betsy Markey and Gov. Bill Ritter, that finding new money within a month is an impossible task, considering the reluctance of banks to lend in this economy and the sheer volume of loans left unfunded by the New Frontier collapse.
Bennet, Udall and Markey announced last week that the Farm Service Agency will make $253 million in emergency loans funding available to about 1,900 family farmers who will receive direct operating loan assistance, and to another 620 family farmers who will receive guaranteed operating loan funds.
They also acknowledged the inadequacy of the FSA money.
“It’s doubtful there will be enough money to help everyone who has been hurt by this closure,” Udall said after the town hall meeting.
The federal loans will cover only a fraction of the $700 million in credit extended by New Frontier Bank in its 10 years of operation, leaving many Colorado farmers in dire straits.
Gary Teague, of Fort Morgan, made a tear-filled plea to Vilsack on Monday, saying his farm missed payroll last week because of the New Frontier Bank closure and that the FDIC has threatened to liquidate his farm within three weeks if he can’t get a new loan.
“We’re not asking for a bailout,” Teague said, adding that what he does need is a loan to fund his operation. “We’re just asking that someone pick up the phone and make a call. We need help and we need it today, not down the road.”
Vilsack, a Democrat who served as Iowa governor from 1998 to 2007, told the farmers that he understands the dire nature of their situation. He promised to place a personal phone call to the head of the FDIC after the meeting to see what could be done about extending the 30-day time limit.
“Anytime a bank like this closes down, it affects farm families and it impacts every single business on Main Street,” Vilsack said. “Hopefully we will have some discussion with the FDIC chair … about this situation. But I’m not sure what we can do but try to allow people to have more time to address these credit problems.”
Vilsack said knowing that $250 million in loan assistance is coming from the FSA might help convince the FDIC to give the farmers some leeway, but added that he can’t make any promises.
“We need to explain to the chair of the FDIC that we have made more than $250 million in capital available to help finance these loans, but that will be difficult to do in the amount of time that has been provided,” he said. “Hopefully, with these resources, they will be willing to push back the timeframe. Plus, we hope to get across the message that if you force liquidations at the same time, it can affect the market and cause these farmers to get less for their assets than they would otherwise.”
Ritter said that he has made sure state Commissioner on Agriculture John Stulp has been involved in the discussions with the FDIC from the onset. He reassured farmers that the state is not sitting idly by as they lose their farms and homes. However, he said, there’s only so much the state government can do in times like these.
“This bank was involved in some very risky practices … but it’s the people who relied on them that are the victims,” Ritter said. “We’re trying to do what we can, with our discussions with FDIC, to make sure they understand that this isn’t something that you can do in 30 days. The impact of us not doing that — not just across the community but the state — is immense.”
Farmers, however, weren’t getting much reassurance from the straight talk politicians were offering at the town hall meeting. When asked how the discussions with the FDIC were progressing, Stokes said things were not looking promising for many of the affected farmers.
“They have made it very clear that the FDIC is here to close a bank and not to be a long-term lender,” Stokes said. “But, unfortunately, a lot of people are upside-down on their loans … and that makes it hard to find another lender who is willing to take them on.”
The reality for many farmers on the Eastern Plains and the politicians who represent them, is that many of the dairies and cattle operations that were funded by New Frontier Bank won’t continue to operate past the next couple of weeks — a fact Markey acknowledged.
“We think this is the most pressing issue in the district right now,” Markey said. “And I think it’s hard to say at this point exactly who or how many (farms) will ultimately be able to find new lenders and continue doing business. The impact of that is immense.”