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North Central Iowa | In the 80's when the bank examiners came in they looked at all the Ag loans and divided them into 3 piles. Pile no 1 was the farmer had lots of equity. Pile no 2 was the farmers with equity that equaled his debts. And pile no 3 was the farmers that were way deep into insolvency. The examiners said the bank had to reduce their risk of loans and gave the bank the choice who they would cut. Well guess who the bank cut. It was group no 2 because they could cut the loans to satisfy the examiners and not lose any money in the deal. Banks and loan officers went into job preservation mode as is what will happen again if we raise another bigger than normal crop around the world or the world economy slows down more yet in 16. My father and I both survived the 80's by driving truck for outside income. There will be no job good enough to save a farm this time with the amount of money that could be lost per acre or if interest rates even only go to 9 or 10 %. Farmers will find out how fast you can wipe out a million dollars in equity with the stroke of a bankers pen. | |
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For those who survived the 80's?
