Moffeit returns to the human side of the bank failure on August 18, with a story on that day’s auction by the federal government of 418 farm loans still left on New Frontier’s books:
The auction is believed to be the largest sale of farm notes since the aftermath of the 1980s savings-and-loan crisis, and it has many Colorado farmers fearful they will lose their property as a result.
Farmers suspect investors or banks will snap up their notes at fire-sale prices, then liquidate their collateral to score a quick profit.
There is obviously a lot to this story. What interested the national press? Well, wire services dipped in here and there—with the most attention coming the day of the bank’s closure—but these were mostly news blips. NPR brought some life to the story with a segment looking at the bank failure’s effect on farmers. But the most notable attention came from a substantial page-one piece in The Wall Street Journal on June16,
The piece does a nice job at putting the Greeley situation in larger financial context without adding much that is new. In fact, the WSJ’s cast of local characters overlaps almost exactly with a Greeley Tribune piece that had appeared May 31.
The opening paragraphs of the WSJ story give you a sense of it:
Larry Seastrom, the founder of New Frontier Bank, made it a mantra to invest in his community. That paid off big time, both for the bank and for this fast-growing college town on the broad plains of northeast Colorado. Founded a decade ago in a double-wide trailer, New Frontier hit $1 billion in assets in July of 2006 and, in a burst of growth, doubled to $2 billion in just 18 months. Then, just as quickly, it collapsed.
While some details get lost, the WSJ does give us some new ones on the bank and offers several pieces of nice context. Like:
Nationwide, nearly three dozen small and midsize banks have failed this year. Another 80 are under pressure to raise more capital. Treasury Secretary Timothy Geithner recently announced that he intends to extend bailout funds to more community banks. He will have significant sums at his disposal, given last week’s announcement that financial giants such as J.P. Morgan Chase & Co. and Morgan Stanley plan to return billions in bailout money to the Treasury. But some industry advocates say small banks need more than cash handouts. Many community bankers say regulators are pressing them to write down the value of certain assets, such as construction loans. That pressure applies to all banks — part of an effort to ensure financial balance sheets are realistic — but small banks feel the impact more keenly because their loan portfolios tend to be less diversified. The American Bankers Association says it will raise the issue at an upcoming meeting with Treasury officials.
The Journal also offered a slideshow on the bank and local community. And if you doubt whether the issues raised by New Frontier’s failure are important well beyond the borders of Colorado, just look at the WSJ’s forum on the piece.
We don’t agree with a lot of the comments—and many of the commenters would have benefited from a look at the Post and Tribune coverage—but they hit important topics, like the roles of community banks, regulators, and borrowers in the US banking system.
These days, readers can reach in and pull up coverage from remote (for us) places like Greeley. That you can do it for free may be bizarre, but that’s a story for another day. For our purposes, the New Frontier story shows that if you want fine-grain and urgent business reporting, as well as the 30,000-foot-view, as long as you can drill down, you should.