GREELEY — Members of Colorado’s congressional delegation are asking U.S. Treasury Secretary Tim Geithner for federal stimulus funds to bail out small banks after the failure of a Colorado agricultural bank left hundreds of farmers and ranchers struggling.
Colorado Sens. Mark Udall and Michael Bennet and Rep. Betsy Markey said the bank failure created a need for about $700 million in agricultural loans that other lenders haven’t been able to provide.
Banking officials and some of the state’s congressional representatives met Saturday with about 300 former bank customers who say they can’t get new loans.
The agricultural bank was closed April 10, about four months after federal regulators issued a cease-and-desist order against the bank for “unsafe” and “unsound” practices.
Ron Bieker, deputy director for the Division of Resolutions and Receiverships for the Federal Deposit Insurance Corp., said the federal agency is trying to maintain a “fragile balance” between the needs of borrowers and bank customers and new federal guidelines cracking down on bad loans.
He said the FDIC took over the bank to shut it down, not to provide interim loans.
He also told the farmers and ranchers the FDIC is doing all it can to support other local banks that want to take over the loans, but warned, “We’re not a long-term solution to your problems.”
Loyal Gallatin, a Greeley contractor, told the panel he has been to 13 other institutions and can’t find anyone to refinance his $1.6 million loan.
“I’m out of business. I am told they can go after my soul, my home. We’re on our knees begging for help,” he said.
Windsor Mayor John Vazquez told the delegation he also can’t get a loan for his small business and that the government crackdown on loans is making a bad situation worse.
Sam Herston, a Loveland farmer, demanded to know why the federal government didn’t step in sooner and prevent the bank from being shut down after federal regulators were notified in December that the bank was in trouble.
“The big Wall Street banks, you just pass out the cash to those guys,” he said.
Bennet said federal stimulus dollars are going to local communities for transportation and other projects, but people need to see a direct benefit of the federal stimulus plan. He said it’s not fair for the big banks to get bailed out, while smaller banks that have a more direct impact on daily life pay the price.
“People see funds going to banks in New York and Wall Street, but they don’t see them going to local communities,” Bennet said.
Gary DeJohn, president of DeJohn Housemoving in Greeley, told the panel the situation is dire for many local businessmen.
“This is Katrina,” he said.
In their letter to Geithner, the congressional delegates said other banks lack the capital assets to fill the void.
They urged Geithner to review loan standards and possibly provide “a more forgiving standard” to smaller banks.
