One of the biggesr lenders to U.S. farmers has triggered a slew of loan defaults and lawsuits in recent years after rushing in where other banks tried to scale back, P.J. Huffstutter reports for Reuters.
Chicago-based BMO Harris Bank, a subsidiary of Canada's Bank of Montreal, aggressively expanded its U.S. farm loan portfolio over the past decade, giving some farmers more than they had asked for and without ensuring that they were good loan risks, Huffstutter reports.
That includes farmers like Greg Kruger, who grows corn and soybeans in Harrod, Ohio. In 2013, Kruger initially asked BMO Harris for a $2 million loan to build a grain elevator. But the bank gave him $12 million in loans and told Kruger not to bother providing standard documentation that would prove his financial worth. In 2018, "the bank called in Kruger’s loans as corn and soy prices collapsed and the United States was starting a trade war with China."
BMO Harris "has struggled to recoup some of its investments through a slew of bitter legal fights, according to a Reuters review of court documents and bank regulator data, as well as interviews with dozens of U.S. farmers, bankers, and former and current BMO Harris employees," Huffstutter reports.
As of the end of June, almost 13.1 percent of the bank's U.S. farm loans were at least 90 days late or had stopped accruing interest because the bank doubts the money will be paid back, compared to 1.53% for all such loans insured by the Federal Deposit Insurance Corporation, Huffstutter reports. That's the highest rate among the 30 largest FDIC banks, according to a Reuters analysis.
"The plight of BMO Harris and its customers reflects broader distress in the U.S. farm sector. Farmers are struggling to pay back their loans or obtain new ones," Huffstutter reports. "Shrinking cash flow is pushing some to retire early and a growing number of producers to declare bankruptcy, according to farm economists and legal experts."
Chicago-based BMO Harris Bank, a subsidiary of Canada's Bank of Montreal, aggressively expanded its U.S. farm loan portfolio over the past decade, giving some farmers more than they had asked for and without ensuring that they were good loan risks, Huffstutter reports.
That includes farmers like Greg Kruger, who grows corn and soybeans in Harrod, Ohio. In 2013, Kruger initially asked BMO Harris for a $2 million loan to build a grain elevator. But the bank gave him $12 million in loans and told Kruger not to bother providing standard documentation that would prove his financial worth. In 2018, "the bank called in Kruger’s loans as corn and soy prices collapsed and the United States was starting a trade war with China."
BMO Harris "has struggled to recoup some of its investments through a slew of bitter legal fights, according to a Reuters review of court documents and bank regulator data, as well as interviews with dozens of U.S. farmers, bankers, and former and current BMO Harris employees," Huffstutter reports.
As of the end of June, almost 13.1 percent of the bank's U.S. farm loans were at least 90 days late or had stopped accruing interest because the bank doubts the money will be paid back, compared to 1.53% for all such loans insured by the Federal Deposit Insurance Corporation, Huffstutter reports. That's the highest rate among the 30 largest FDIC banks, according to a Reuters analysis.
"The plight of BMO Harris and its customers reflects broader distress in the U.S. farm sector. Farmers are struggling to pay back their loans or obtain new ones," Huffstutter reports. "Shrinking cash flow is pushing some to retire early and a growing number of producers to declare bankruptcy, according to farm economists and legal experts."
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