Washington, DC – U.S. Senators Mark Udall and Michael Bennet and Congresswoman Betsy Markey are seeking help for Northern Colorado farmers and small business owners affected by the closure of New Frontier Bank through the Treasury Department’s Troubled Asset Relief Program (TARP).
In a letter to Treasury Secretary Timothy Geithner, Udall, Bennet and Markey ask Geithner to offer support to small banks in the region, which are currently unable to meet the demand for credit that has resulted from New Frontier’s closure. Treasury Secretary Timothy Geithner recently announced that smaller banks should be more fully included in the program. Udall, Bennet and Markey would like that new focus to offer some relief to Northern Colorado.
The full text of the letter is included below:
Secretary Timothy Geithner
United States Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Secretary Geithner,
On April 10, 2009, the Colorado Division of Banking ordered the closure of New Frontier Bank in Greeley, Colorado and since then the Federal Deposit Insurance Corporation (FDIC) has worked to aid customers in managing their deposits. However, for many of our constituents, New Frontier’s importance was not merely in the deposits it held. New Frontier also served as the cornerstone of the local agricultural economy through its agriculture-focused lending activity.
Weld County, where New Frontier was located, has the eighth highest agricultural market value in the nation and the largest in Colorado. New Frontier Bank specialized in agricultural lending and financed as many as one in three dairy cows in the state. The closure of this institution has forced many agricultural operations to seek a new source of credit in order to fund this year’s planting season and day to day operations.
Unfortunately, the area’s other lending institutions have faced limitations in filling the credit and customer service voids caused by New Frontier’s closing. New Frontier’s capital assets enabled it to offer more than $2 billion in credit to local business. With the national economic crisis, other local lenders are simply not able to fill the void created by New Frontier’s closure–even for farmers in good financial standing. Smaller, local banks are eager to increase credit opportunities in the region, but they do not have the capital assets necessary to make this possible. There is no simple solution to this problem, but it is vital that we do everything we can to ease the turbulence that has shocked this local economy since New Frontier Bank’s closure.
The U.S. Department of Treasury recently announced that smaller banks should be more fully included in the Troubled Asset Relief Program (TARP). We urge you to apply Treasury’s new focus on smaller financial institutions to the dire situation affecting former New Frontier customers in Northeastern Colorado.
The possibility of acquiring TARP funds is not a novel concept to banks in Northeastern Colorado. We understand some banks in this region have applied for TARP funding; however, these banks have either withdrawn their applications in consultation with regulators or their applications have otherwise not been approved. We further understand that in circumstances where a TARP application is a close call, the regulator reviewing the application will consult with a broader regulatory committee. We ask that you clarify if any such committees convened to review any TARP applicant doing business in Northeastern Colorado. We also wish to know that if such a committee was convened and it denied or discouraged an application, were there dissenting opinions on this committee?
Furthermore, given the Treasury’s announcement of intent to focus additional TARP resources on smaller financial institutions, can banks in Northeastern Colorado which have already applied once reapply? Is an original denial or a withdrawal by the applicant a final determination? Given the Treasury’s new emphasis, would a reapplication by a smaller bank be subject to a more forgiving standard?
In light of the gravity of the situation facing New Frontier’s former customers and the northeastern Colorado economy, we urge the Department to provide due consideration to such regional bank applicants or reapplicants (particularly those with a history of engaging in agricultural lending). Taking a second look at the TARP applications of potential Northern Colorado lenders could be the difference between a severe economic setback in New Frontier’s service area, and sustained economic recovery.
We have been coordinating with the FDIC and U.S. Department of Agriculture to help these agencies coordinate efforts to stem this crisis. In light of our request herein, we would also like to request a meeting with representatives of the Office of Financial Stability, which has oversight responsibility over the TARP application process. We would ask you to make available the appropriate people within the Office of Financial Stability for a meeting with our staffs. We are hopeful that the Treasury Department can find ways to assist our constituents in need.
We welcome the opportunity to work with you toward ensuring the continued prosperity of one of our nation’s agricultural communities.
Sincerely,
Mark Udall Michael F. Bennet Betsy Markey
Cc: Office of Financial Stability