FDIC extends deadline for bank aid for farmers
By Jason Kosena
Days after U.S. Department of Agriculture Secretary Tom Vilsack heard pleas for federal help from Eastern Plains farmers in the state who stand to lose everything as a result of the closure of Greeley’s New Frontier Bank, the Federal Deposit Insurance Corporation said it would change its plans, but only slightly.
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.
But after hundreds of people lined up to tell Vilsack and many in the Colorado Democratic congressional delegation about their struggle with the short timeline last week at a town hall forum, the Washington, D.C. lawmakers made some calls to federal officials at the FDIC to see what could be done.
On Saturday, the FDIC said it received those calls and will extend the 30-day deadline it imposed on farmers to find new financing. Although it didn’t say how long that extension will last, the FDIC reiterated that it couldn’t guarantee a workable solution to ensure all the farms in Colorado affected by the NFB closure will survive, but it would make an effort to allow owners more time to find new financing.
“I am glad that the FDIC has responded to our request to clarify that New Frontier’s borrowers have more than 30 days to find alternative financial arrangements,” Democratic Sen. Mark Udall, of Eldorado Springs, said. “But I know that doesn’t come close to answering all of the questions out there. I heard borrowers’ concerns loud and clear. They deserve answers, and I look forward to learning more from the FDIC and others.”
The federal help the Colorado delegation is seeking for farmers isn’t stopping there. During a town hall forum in Greeley last weekend, Udall, accompanied by Democrats Sen. Michael Bennet, of Denver, and Rep. Betsy Markey, of Fort Collins, said they plan to ask U.S. Treasury Secretary Tim Geithner for federal stimulus dollars to be funneled to small banks in the area. The goal, they said, was to help those institutions carry the customers who took loans from the failed New Frontier Bank.
The smaller banks, which have been unable or unwilling to take on many of the loans to this point, will be better situated to help farmers at risk of seeing their assets liquidated, Markey, Udall and Bennet said.
“Our farmers face enormous challenges today,” Bennet said. “A severe credit crunch worsened by the closure of New Frontier Bank, plummeting milk and livestock prices, and rising costs for fuel and feed. Northern Colorado’s farmers deserve answers to their questions.”
But, it might not be as simple as offering smaller banks federal money.
It is not clear how far the Colorado lawmakers’ request for federal stimulus dollars to bail out small banks will go with the Treasury Department. And, unlike the larger financial institutions, which have already received hundreds of billions in federal assistance in the last six months, the small community banks may choose not to accept the funding out of fear of the limits placed on executive pay by the Obama administration on institutions that accept money along with other mandates.
The failure of New Frontier Bank last month has hit the state hard. Farmers up and down the Eastern Plains have said that without loan help they will be forced to close down their operations and leave thousands unemployed.
To offset some of the pain, Bennet, Udall and Markey announced two weeks ago that the Farm Service Agency will make $253 million in emergency loans available to about 1,900 family farmers who will receive direct operating loan assistance on the Eastern Plains, and to another 620 family farmers who will receive guaranteed operating loan funds. But, they also acknowledged the inadequacy of the FSA money and its ability to cover nearly $700 million in New Frontier Bank loans that essentially evaporated overnight when the bank failed.
“It’s doubtful there will be enough money to help everyone who has been hurt by this closure,” Udall said after a town hall meeting in Brush, Colo. last week.