FDIC to farmers: 30 days to find financing
“I don’t need a bailout. What I do need is a bank,” said Gary Teague a northern Colorado farmer. According to the Denver Post, Teague ”runs a $50 million business that employs 155 people, and the Federal Deposit Insurance Corp. has given him 30 days to renegotiate his loans, or they will be liquidated.”
Teague made his “tearful” statement during a community forum with Secretary of Agriculture Tom Vilsack, Congresswoman Betsy Markey and Senators Michael Bennet and Mark Udall. The meeting at the Morgan County Fairgrounds drew 300 “angry farmers and ranchers [who] demanded help from the federal government” after the collapse of New Frontier Bank.
On Saturday, Colorado’s congressional delegation announced that Vilsack freed up $253 million in federal funding to be used for operating loans for farmers and ranchers in search of banks to extend them new lines of credit. It’s up to banks to pick up the money and extend the loans.
While the $253 million is welcome news, it is well short of the nearly $448 million in outstanding agricultural loans that New Frontier had when it closed on Friday. Despite claims from farmers and ranchers that they are current on loans, sources tell me some bankers simply are hesitant to lend. Agriculture is a risky business. The Denver Post confirmed it: “Several area farm leaders said banks in northern Colorado view many of the New Frontier loans as distressed and will not take them on.”
The ripple effect of this will be profound. If the eighth largest agricultural county in the United States goes belly-up, not only will Weld County be hurt but also the entire state of Colorado. Summed up by one attendee, “‘Many of the people in this room buy from each other, whether it’s grain or alfalfa. You can’t believe the carnage that will happen’ if the farmers don’t receive more help.”
Couple that with a possible decline in oil and gas revenue — our economic outlook is worrrisome.