Bailout trickles up, not down

"You're good for it."

That's what most everyone has been telling Pam Pentz lately. You can slide this month, Pam. We know you're good for it.

Everyone said that but her bank.

Pam's a horse trainer east of Woodinville. Last month the roof of her Olympic-sized horse-riding arena collapsed under the weight of the snow, all but shutting down her Derby Farms business.

The roof's insured so it will be fixed. But in the meantime she owes her hay man $1,300. The stall guy $2,000. The third-generation outfit that brings wood shavings for her 27 horses is due $1,800.

Don't worry, they all said. You're good for it.

It was nice to hear, but she fretted. How long can these others go without pay? So, to tide her over until her arena is back, Pam, 60, asked her longtime bank for a loan.

It was a pittance, really — a $15,000 line against a farm with at least a half-million dollars in equity. Where she's been in business for 30 years and has never missed a mortgage payment.

But the bank — Banner Bank, which likes to say that "you can take the bank out of the small town but you can't take the small town out of the bank" — said no.

You're not good for it, Pam.

The reason I'm telling you about a piddling $15,000 denied loan is that last fall Banner Bank got $124 million of your money as part of the bank bailout.

Yet Banner is not a troubled bank. It didn't need any rescue. The U.S. government gave the money on the theory Banner would turn around and lend it to people like Pam.

"It's supposed to be trickle down," Pam says. "But these people wouldn't trickle a nickel down to Jesus."

This is not to pile on Banner Bank. It has got a lot of company. Last week the panel watchdogging the bailout reported that "hundreds of billions of dollars have been injected into the marketplace with no demonstrable effects on lending." What was the money used for? It isn't clear because the banks won't say, charged the Congressional Oversight Panel (read the report at cop.senate.gov).

Banner Bank insists it is open and making loans. The number of home refinances, for example, is growing again. But "there are challenges out there, no question, even with all this new capital," said Doug Bayne, Banner's marketing director.

Challenge No. 1: Plummeting property values have made the banks skittish — maybe overly so — about loaning against land.

Here's what I'm challenged by: This bailout isn't working. It's fine for the banks. And the government insists it will eventually earn back its money because it now owns shares in all these banks.

But for the rest of us, it's a black box. Money goes in but doesn't seem to come out. For people like Pam Pentz: When will the nickel start to trickle?

It won't, she figures. So she sold a horse to raise some cash. And she's got the endurance and goodwill of the hay man, the stall guy, the third-generation sawdust and shavings company.

Story of America, she says.

"There is no trickle down. When you really need help, what carries you is always trickle up."

Danny Westneat's column appears Wednesday and Sunday. Reach him at 206-464-2086 or dwestneat@seattletimes.com.