Who was rescued by taxpayers' Yarnell bailouts? | Arkansas Blog

Saturday, July 2, 2011

Who was rescued by taxpayers' Yarnell bailouts?

Posted By on Sat, Jul 2, 2011 at 7:25 AM

SOCIALIZED ICE CREAM: Taxpayers bailout couldnt save Yarnells.
  • SOCIALIZED ICE CREAM: Taxpayers' bailout couldn't save Yarnell's.
I think it's a question of legitimate public interest to know what bank the Arkansas Development Finance Authority let off the hook when it took over $2.5 million in debt for Yarnell's Ice Cream in Searcy in 2000. Almost $2 million of that debt must be eaten, perhaps reduced by asset sales, by ADFA. The money will come from its bond guaranty fund. This diminishes a public agency, even if it's not a direct loss of taxpayers' money. The debt assumption WAS a monumental gift to a financial institution, which seems to have recognized a company that was no longer credit-worthy. Were political considerations at play?

And speaking of credit-worthy: It's also a matter of public interest to see Arkansas Economic Development Commission files about the decision that led to funneling of a 2006 block grant of $1.5 million to Yarnell's and what influence might have come from other political quarters in Arkansas (Mike Huckabee was governor then as he was in 2000). The state is now on the hook for that unpaid loan, too. Block grants to private businesses are fairly rare birds I was told yesterday. The AEDC, of course, zealously guards its files. Damage to competitive interests is the excuse. That no longer exists for a defunct operation, it seems to me. I wonder, too, if this loan effectively substituted for some other private credit lines for the ice cream maker.

Could your business get $4 million in state loans when you couldn't demonstrate ability to obtain private financing? Might you, at a minimum, have to underwrite some of that obligation personally, as banks generally require? Jobs were saved for a period, yes, but under that theory there are failing businesses all over that the state could prop up. The slow repayment on the ADFA loan hints that Yarnell's wasn't on the road to recovery when further state credit was extended by AEDC.

It does make you wonder, too, what other stinkers ADFA and AEDC might have in their portfolios. There's at least one involving a former politician over at ADFA, many believe.

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