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Honored Advisor
Posts: 11,091
Registered: ‎05-13-2010
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Re: Do guys go broke anymore

Let's be honest:  Everyone wants to lend to the good risk, and let everyone else have the bad ones.  Some commercial banks have in spells not given a **bleep** if there was a single farm loan funded. 

When home mortgages looked like such a sure thing, with no downside, they all flocked there in droves.  Mainstream ag was sucking wind for a lot of those years...and without government programs, still would be some circles. 

We've made it a point in all our years of business to "dance with the one that brung us," so to speak.  One brief detour to a commercial bank was a disastrous discovery of loan fraud for me...that loan officer ended up giving the bank her hoime to avoid jail time, and another employee got fired just for letting her back in the door.  It all started to unravel for her when I told her direct boss's secretary, when I was told he "did not talk to customers" when I called to inform him about her,  that the next number I would be dialing was the Attorney General, if he truly did not have time for me.  It took less than fifteen minutes for me to outline probably five felonies right under his nose.  She was the one who famously told me that if you wanted to write a loan on a house, and it was not worth it, turn around and photograph the one across the street.  If you get caught, claim you got confused.  I heard him sucking in air hard on that one alone.  The rest was worse.  This is how cheating on mortgage loans is/was done at the street level. 

Someone else mentions weather as a serious risk factor of ag profitability.  You bring up a lot of the further-processing and more speculative uses of farm poruducts and farmland as potentially risky business.  Our associationm claims it only takes minor shares in such stuff, but a lot of small exposures can add up to a big one eventually.