Boise News

Economy

First Bank of Idaho Board Member Takes Case to D.C.

By Jill Kuraitis, 5-04-09

A Sun Valley area bank which was closed by a federal agency ten days ago has a fierce advocate in its board member Nancy Schauer, who traveled to Washington, D.C. Sunday to try to “undo this takeover.”

The U.S. Treasury Department’s Office of Thrift Supervision (OTS) ordered the closing of the bank on April 24, and the FDIC implemented the order by sending officers to Sun Valley that day. Currently, the FDIC is the bank’s receiver.

Schauer, who is a director of Sun Valley Bancorp and First Bank of Idaho, says she’s optimistic about her chances. “I want to make my best effort because it’s the only chance we’re going to get,” she told NewWest.Net/Boise.

Community advocate Hilary Furlong will join Schauer in D.C. Furlong is the executive director of the St. Luke’s Wood River Valley Foundation. The two have appointments with officials from the FDIC and the OTS, and hope to meet with Reps. Mike Simpson and Walt Minnick as well as Sens. Mike Crapo and Jim Risch. 

Crapo is on the Senate Banking, Housing and Urban Affairs committee.  His spokesman Lindsay Nothern told NewWest.Net/Boise that “Ms. Schauer has posed some important questions and we think that it is appropriate that she be given the opportunity to make her case to the right folks at the FDIC.”

Minnick, who represents Idaho’s First Congressional District, serves on the House Financial Services subcommittee, has been in touch with First Bank board members since the FDIC action last week. He plans to meet with Schauer this week if his schedule permits, and has referred her to fellow Rep. Simpson, since the bank is in the 2nd Congressional District.  But “we’re interested in this bank closure from a policy perspective,” said Minnick’s spokesman John Foster. The subcommittee has tentatively scheduled a hearing this week on small bank closures and community banking issues. 

Schauer said the bank had an investor with $10 million, and added to the bank’s liquid $10 million and $15 million in pending loans it could have survived – and even thrived, she said.

“The FDIC says they will lose $191 million because of what has happened, but if they’d waited a few weeks it never had to happen,” said Schauer. “That’s 191 million reasons why this takeover should be undone. Now the losses are incalculable,” she said. “A $35 million loss to our shareholders, the loss of more than 60 local jobs, which is a huge number of jobs for this area, the payroll that won’t be spent here, the taxes that won’t be collected here, the home foreclosures. People here know how much this bank has done for the community, and it’s a calamity for many small businesses.”

Schauer’s idea is to persuade the two federal agencies to establish a “bridge bank,” an action that has recently been undertaken at Silverton Bank in Atlanta, Georgia. When a bridge bank is formed, the law allows investors, including other small banks, to keep functioning normally in their transactions with the original bank.The FDIC operates the bridge bank until conditions improve enough for the original bank to be reestablished, or until the agency rules that there is no reason to believe that the bank can succeed.

Ketchum mayor Randy Hall told NewWest.Net/Boise last week that his aim is to save small businesses which have been left without the lines of credit they need to operate. Hall and other board and community members have been meeting with other bank presidents, investors, depositors and community leaders, and have asked the Small Business Administration for help.

Schauer, who acknowledged that her efforts to save the bank are a long shot, said, “I want this to be a win-win for Idaho but also for the American people – to show that a community bank can be saved.”

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