Internet Auction of Farm Loans

Wednesday, the Federal Deposit Insurance Corporation began the process of conducting what may be the largest sale of farm notes since the 1980s savings-and-loan crisis. Being offered at auction on the Internet are 418 farm loans stranded on the books of failed Greeley, Colorado-based New Frontier Bank. Many of the farmers involved fear they will lose their property as a result. Investors or banks were expected to snap up their notes at fire-sale prices and then liquidate their collateral to score a quick profit.

Bob Winter, a board member of the Colorado Farm Bureau said it could be devastating. The loans were originally valued at $455 million and most of the notes were in poor shape, held by dairymen and other farmers hammered by turbulent commodities prices. About 70% of the loans are classified as nonperforming, meaning more than 60 days past due at the time of the bank's closing.