Not linked on Ron Paul’s Congressional Website.
HON. RON PAUL
OF TEXAS
IN THE HOUSE OF REPRESENTATIVES
Wednesday, July 15, 2009
2009 Ron Paul 79:1
Mr. PAUL. Madam Speaker, at a time when
the financial headlines are dominated by stories
of financial institutions seeking taxpayer
funds and other special privileges, I am
pleased to call my colleagues’ attention to a
story from the Galveston Daily News about
how four community banks came together to
help their friends, neighbors and customers
begin to recover and rebuild from Hurricane
Ike.
2009 Ron Paul 79:2
Last fall, as the people of Galveston were
assessing the damage from Hurricane Ike and
Congress was beginning debate on spending
billions of taxpayer funds to bail out irresponsible
financial institutions, representatives of
Frost, HomeTown, Moody National and Texas
First banks meet to discuss how these banks
could help jumpstart hurricane recovery efforts.
The four banks agreed to make unsecured
bridge loans to Galveston businesses to
ensure these businesses had access to capital
while they waited for federal assistance and
insurance payments.
2009 Ron Paul 79:3
The four banks made more than $40 million
recovery loans. These loans provided lifelines
to many businesses struggling with both
the devastation of Hurricane Ike and the credit
crisis. Without the efforts of these four banks,
several Galveston businesses would have had
shut their doors.
2009 Ron Paul 79:4
In conclusion, Madam Speaker, I extend my
thanks to management and employees of
Frost, HomeTown, Moody National, and Texas
First banks for their efforts to help the businesses
and people of Galveston recover from
Hurricane Ike.
2009 Ron Paul 79:5
[From the Galveston Daily News, May 24,
2009]
BANKS STEPPED UP WHEN CHIPS, ECONOMY
WERE DOWN
(By Laura Elder)
Just days after Hurricane Ike, as failing
Wall Street institutions roiled the U.S. financial
system, civic leaders and representatives
of four banks forged an agreement that
would profoundly shape the island’s economic
recovery.
2009 Ron Paul 79:6
After several meetings, some in storm-
swamped buildings under generator-powered
lights, representatives of Frost, HomeTown,
Moody National and Texas First banks
agreed to make unsecured bridge loans to island
businesses for rebuilding until federal
money and insurance payments materialized.
2009 Ron Paul 79:7
The community banks made more than $40
million in recovery loans at a time when
lending by industry giants had all but
ground to a halt. The 180-day loans, at 5 percent
interest, were a lifeline to local businesses
hoping to recover quickly from a hurricane
that inflicted $11.4 billion in damage
along the upper Texas Coast.
2009 Ron Paul 79:8
Some island business owners said their
livelihoods would have been lost for good had
not been for the help of community bankers.
2009 Ron Paul 79:9
LINE OF CREDIT
Charley DiBella, owner of DiBella’s Italian
Restaurant, which took in 4 feet of storm
surge, was helped by HomeTown Bank not
once but twice after Hurricane Ike, which
struck Sept. 13.
2009 Ron Paul 79:10
DiBella credits the bank and Gary
Gilliland, chief commercial lending officer,
for providing a line of credit to the restaurant.
2009 Ron Paul 79:11
With the loan, DiBella’s was able to make
storm repairs and open in November. But in
January, disaster struck again when a fire
broke out on the second floor of the 20-year-
old restaurant. HomeTown Bank helped
again, DiBella said. DiBella’s Italian Restaurant
plans to reopen Tuesday.
2009 Ron Paul 79:12
“Without HomeTown Bank and Gary
Gilliland, there wouldn’t be a DiBella’s Restaurant,”
DiBella said. “I had insurance, but
you know what that’s like.”
2009 Ron Paul 79:13
Gilliland, who checked on properties for
his clients who had evacuated and weren’t
allowed back on the island for days after the
storm, was in May named Indie Banker of
the Month by Independent Banker Magazine
for his work during Hurricane Ike.
2009 Ron Paul 79:14
BRIDGE OF DOLLARS
HomeTown Bank, at last count, had made
more than $6 million in bridge loans to area
businesses after the storm, said Jimmy Rasmussen,
president and chief executive officer.
2009 Ron Paul 79:15
Two days after Ike struck, Wall Street institution
Lehman Brothers filed for Chapter
11 bankruptcy, deepening a financial crisis
and already painful credit crunch that had
stalled lending. Fast-and-loose credit practices
by the banking giants had come home
to roost.
2009 Ron Paul 79:16
NO ‘VOODOO’ PRODUCTS
But independent and community banks
were never caught holding a bundle of bad
loans.
2009 Ron Paul 79:17
“We’re not sitting here selling voodoo
products to peddle to people,” said Matt
Doyle, vice chairman of Texas First Bank.
2009 Ron Paul 79:18
That local competing banks got together
in one room after the hurricane wasn’t so
unusual, Doyle said.
2009 Ron Paul 79:19
“We may be competitors, but we’re community
bankers,” Doyle said. “When our
community is suffering, all that goes out the
window, and it’s never really even in the
house.”
2009 Ron Paul 79:21
Bankers are the first to say their efforts
weren’t without self-interest. They certainly
earned money from the loans. And they
made loans based on credit history, long-
standing relations and with the understanding
they would be repaid.
2009 Ron Paul 79:22
IN IT TOGETHER
And if a lot of local businesses failed, the
local banks were going to feel it, so they had
an interest in the success of their neighbors.
2009 Ron Paul 79:23
“If Galveston business didn’t recover,
we’re all going to be damaged, all going to
take losses,” said Vic Pierson, president of
Moody National Bank, which made about $21
million in recovery loans after the storm.
2009 Ron Paul 79:24
“It was in our best interest to do whatever
we could to assist as rapidly as we could for
business recovery on the island.”
2009 Ron Paul 79:25
STRONG RELATIONSHIPS
Those who didn’t have strong relationships
with their bankers were left waiting for help
from the Small Business Administration and
the Federal Emergency Management Agency,
Pierson said.
2009 Ron Paul 79:26
“Those programs are very good, but to finally
get some dollars can take 90 to 120 days
or longer,” Pierson said.
2009 Ron Paul 79:27
“A business couldn’t wait three or four
months to get started and I think that’s
where the local community banks came in.”
2009 Ron Paul 79:28
Watching a business rebuild can encourage
others to follow, Pierson said.
2009 Ron Paul 79:29
“It was absolutely critical that people
started putting their businesses back together
and making a statement,” Pierson
said.
2009 Ron Paul 79:30
NEED REMAINS
Albert Shannon, Frost Bank’s group president
in this region, and other bankers interviewed
for this story credited Mayor Lyda
Ann Thomas and Jeff Sjostrom, president of
Galveston Economic Development Partnership,
for the idea of recovery loans. Island
businessman Gerald Sullivan, who early
after the storm was appointed by Thomas to
help with recovery, also played a role in encouraging
recovery loans, bankers said.
2009 Ron Paul 79:31
Frost Bank, headquartered in San Antonio,
made $5 million in recovery loans, Shannon
said.
2009 Ron Paul 79:32
Sjostrom recently traveled to Manatee,
Fla., to share ideas with officials there about
recovery efforts.
2009 Ron Paul 79:33
“They were just amazed at the response of
our local lenders,” Sjostrom said.
2009 Ron Paul 79:34
Still only about 75 percent of the island’s
2,500 business have returned, Sjostrom said.
Many were uninsured for flood damage when
Ike struck.
2009 Ron Paul 79:35
Businesses that aren’t able to turn to the
banks are doing what they can to recover,
Sjostrom said,
2009 Ron Paul 79:36
“They’re not sitting back waiting and crying,”
Sjostrom said. “They’re going forward
doing what they have to make it work. We
still have a lot of businesses that need financial
help.”
