When it comes to small towns, Ailey is about as small as they come.
The Montgomery County community is situated a little north of Uvalda and a few miles west of Vidalia in the heart of southeast Georgia’s onion country. Its population was counted at 432 in the last census.
Even with its small size, Ailey was still big enough to have its own hometown bank for more than 85 years: Montgomery Bank & Trust.
A couple of weeks ago, however, regulators shut down the financial institution headquartered on South Lee Street. Montgomery Bank became the 80th bank to fail in Georgia since the economy tanked in 2008.
It was the latest of many chapters in a long-running story that seems to have no ending.
Montgomery Bank was on the verge of collapse in late 2010, largely because of bad real estate loans, when a deal was brokered for a fresh infusion of capital.
About $10 million was raised from an investment group called PFGBI and another $4 million came from local investors. The rescue deal, announced in January 2011, was the first of its kind in Georgia and was lauded for keeping a small community bank in operation.
The chairman of the bank’s board of directors was Pete Robinson, an influential lobbyist on banking matters and a staunch political ally of Gov. Nathan Deal.
The vice chairman of the board was state Rep. Greg Morris, R-Vidalia, who chairs the House Banking Committee and has a hand in all bank bills that progress through the Legislature.
With that kind of expertise on board, you would think Montgomery Bank could have survived and even thrived as a member of Georgia’s banking community.
Survival wasn’t in the cards, however. Also serving on the rescued bank’s board of directors was an investment adviser named Aubrey Lee Price, who was part of the PFGBI investment group that pitched in $10 million to keep Montgomery Bank afloat.
Over a period of 18 months, it is alleged by federal prosecutors, Price embezzled an estimated $17 million from the bank. The Securities and Exchange Commission said in a recently filed complaint that Price made bad investments, then “created bogus account statements with false account balances and returns” to cover his losses.
Price disappeared in June, shortly before Montgomery Bank collapsed, and has been sought by federal authorities ever since. Some of his former associates have theorized he may be on the lam in South America.
Although many institutions like Montgomery Bank have failed over the past four years, the elected leadership in the General Assembly and the governor’s office has expressed little concern about the situation and has done even less to address the problem.
No legislative study committee has been appointed to review the many failures and try to figure out how the state might avoid future collapses.
Neither the Senate nor the House banking committee has called a hearing into the ongoing banking crisis. It’s worth noting that both committees are chaired by legislators who were formerly the directors of banks that failed.
Morris, the House banking committee chairman, was once fined $5,000 by the FDIC for writing a bad check on his account at Montgomery Bank. Even with that incident and the bank’s subsequent failure, Morris is in no danger of losing his committee chairmanship.
“Until we know more information about this situation, the speaker is standing solidly behind Greg Morris,” said a spokesman for House Speaker David Ralston. “He feels Rep. Morris has done a great job as chairman of the banking committee and has worked as hard as he possibly can to make that bank successful given the difficulties it faced.”
The commissioner of the state’s banking department throughout the wave of failures has been Rob Braswell. I sent an inquiry to the governor’s office asking if Deal had any plans to bring in a new commissioner, in light of the many bank failures that have occurred. The governor’s office didn’t bother to respond.
An important piece of the state’s economic infrastructure has collapsed and it seems that no one wants to do anything about it. In fact, no one even seems willing to acknowledge the problem exists. It would almost be funny, if it weren’t so tragic.
(Tom Crawford is editor of The Georgia Report, an internet news service at gareport.com.)