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Crawford: Lawmakers ignore collapse of our banks
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Just before Labor Day weekend in 2008, the Federal Deposit Insurance Corporation sent out a news release announcing that Integrity Bank in Alpharetta was being shut down by regulators.

That was the beginning of a tsunami — caused by the bursting of the real estate bubble — that has swept away a large portion of Georgia's banking institutions. In the 32 months since Integrity Bank collapsed, the FDIC has shut down 60 other state banks, largely because of bad loans made to developers and contractors.

When the wave of failures began in 2008, there were about 300 banks chartered to do business in Georgia. In less than three years, 20 percent of those banks, 1 in every 5, have failed.

These failures mean there is less money available to lend for business startups and expansions, which results in fewer jobs being created. That's a major reason why Georgia's unemployment rate has exceeded the national jobless rate for more than 41 consecutive months.

What has the General Assembly or the governor done to address this crisis? Very little. They have essentially pretended that nothing happened, so there's no need to do anything about it.

I haven't heard any demands from legislators, Republican or Democratic, to create a special commission that would investigate the banking morass. There has been no push to beef up the budget of the state banking department so that it can do a more effective job of identifying problem banks with weak loan portfolios.

In the district of one North Georgia legislator, at least four of the local banks have been closed since the wave of failures started in 2008. You would think that such a development would be troubling to any lawmaker. This legislator has the power to do something about it: he's House Speaker David Ralston.

In the most recent legislative session, Ralston co-sponsored resolutions commending the Georgia Peach Festival and observing the anniversary of Mary Mac's Tea Room. He did not introduce any bills or resolutions that would have launched an investigation of Georgia's bank collapses or required the state banking department to be more diligent in monitoring bank activities.

I'm not trying to single out Ralston here. No other legislator or executive branch official has shown much interest either in getting to the bottom of the banking crisis.

Of course, several of our elected officials are a bit compromised on this issue. Gov. Nathan Deal, for example, borrowed $2.4 million to invest in his daughter's failed business venture in Habersham County. One of the banks Deal borrowed from, Community Bank & Trust of Cornelia, subsequently failed.

Senate Majority Leader Chip Rogers and U.S. Rep. Tom Graves are being sued over allegations that they defaulted on a $2.25 million loan from the Bartow County Bank. That bank was shut down by regulators less than a month ago.

Sen. Jack Murphy sat on the board of directors of Integrity Bank of Alpharetta, whose collapse was the first of the current wave of bank failures. Murphy is being sued by the FDIC, which has accused him and other bank insiders of gross negligence and breach of fiduciary duty in approving risky loans that resulted in losses of about $70 million.

Murphy currently sits as the chairman of the Senate Banking Committee, which has not called any hearings into the state's banking crisis. When the FDIC lawsuit was filed last January, it was suggested that Murphy should step aside as banking committee chairman. He refused.

On other issues, of course, legislators have been quick to act. There have been numerous committee hearings held and bills introduced to crack down on undocumented immigrants.

Lawmakers who want to get tough on immigrants consistently cite the figure of $2.4 billion as the amount of money that undocumented immigrants have cost the state.

According to FDIC data, the 61 bank failures in Georgia have cost the deposit insurance fund an estimated $8.6 billion. That's more than triple the economic impact cited as the reason for cracking down on immigrants. But our lawmakers have been strangely silent on the banking issue.

The banking mess represents a massive leadership failure by our elected officials, but few people know about it or seem to care. It's as if it never happened.

Tom Crawford is the editor of The Georgia Report, an Internet news service that covers government and politics in Georgia. His column appears Wednesdays and on gainesvilletimes.com.

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