Just as the penny-stock scandals reflected badly on Colorado's business community in the last decade of the 20th century, Colorado's bank failures in the first years of this century -- eight since 2008 -- will reflect badly on the state for some time to come.
You hear bankers in the state still complaining about over-regulation, but you don't hear many calls for crackdowns on the fast-money track records of the failed banks, or for reform of the wide-open-West, free-market philosophy that led to the failures.
In fact, whenever the state's political and business communities cross paths in the wake of such business scandals in Colorado, the word traditionally used is "mum."
The Denver Post's Aldo Svaldi has done some admirable reporting on the bank failures, documenting for instance that the eight banks that failed, between 2004 and 2008, averaged loan-growth rates of 900 percent, while the average of all U.S. banks' loan-growth rates was just 44 percent during that period. At 76.2 percent, all of Colorado's banks' loan-growth rates for the same four years also ran considerably higher than the national average.
Those figures show how fast leaders of the failed banks, and leaders of Colorado banks in general, were running and gunning during the free-market heyday for Colorado business during Gov. Bill Owens' administration. Neither of Owens' successors, Bill Ritter nor current Gov. John Hickenlooper, have made any move to slow such unfettered risk-taking, but to do so would offend the business community each has been dependent on for their election.
So don't expect much more response to Svaldi's reporting than continued "mum." I asked three prominent business figures in town to comment on my thesis for this piece -- that all of Colorado business bears some accountability for the business practices that led to the bank failures -- but none responded to my call.
One former banker told me he knew of several banks that laid off what they suspected were bad loans to some of the failed banks thinking that regulators would catch up with the banks eventually and the process would work itself out. It did. Svaldi has reported that the five banks that failed in Colorado this year will cost the Federal Deposit Insurance Corp. $1 billion.
If you recall, that's about how much Silverado Savings and Loan cost the federal government when it failed back in 1988, when I first came to Colorado. "Mum" never changes things anywhere. Speaking up and speaking out occasionally will. Let's hope Svaldi keeps on writing.
You may have noticed that I changed the name of my blog to The SchwabBlog. Nothing more has been changed about it, not its url address nor its tone. Hope you continue to enjoy.
Follow Robert Schwab on Twitter: www.twitter.com/schwabpoet