ABA Banking Journal - November 2010 - (Page 16)

ABA Community BAnking  |  chApteR 12 ANd the mORtGAGe cRIsIs Chapter 12’s bad fit Proposals to adopt farm-type cramdowns for mortgages ignore history, ag experts say By steve cOcheO, execUtIve edItOR A sk veteran ag banker Harley Bergmeyer about proposals to take concepts of Chapter 12, the family farm bankruptcy statute, and adopt them as a cure for the mortgage crisis. He’ll tell you about a minister. It was back during the 1980s ag crisis. The minister worked as a mediator between troubled producers and their lenders. “He was a nice guy,” recalls Bergmeyer, “but he didn’t have a clue about ag.” Bergmeyer feels much the same about those who see Chapter 12 as a model for a mortgage crisis solution. Originally a temporary statute, Chapter 12 came to life towards the end of the ag crisis, in 1986. It was made permanent in 2005. “I can’t think of one case that really did work,” says Bergmeyer. What “benefit” there was went to attorneys, says Bergmeyer, chairman of $350 million-asset First State Bank, Lincoln, Neb. “The cour t system was so plugged up that it was almost impossible to get any judge to hear the cases,” he says. Attorneys had the meter running. ABA research indicates nearly 6,000 filings in the first effective year, 1987. And there are many more homeowners in trouble than there were family farmers taking advantage of 12. Cramdown, in new overalls “What Chapter 12 bankruptcy did for farmers in the 1980s is what 16  |  ABA BANKING JOURNAL  |  november 2010

Table of Contents for the Digital Edition of ABA Banking Journal - November 2010

ABA Banking Journal - November 2010
Contents
Chairman’s View
Editor’s Column
The Economy
Bank Notes
ABA Community Banking: Chapter 12’s Bad Fit
Pass the Aspirin
Tech Topics
Capital Squeeze
Basel III Redefines Capital
Compliance Clinic
Compliance Inbox
ABA Resources
Investment Management
Surveys & Trends
First Person

ABA Banking Journal - November 2010

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