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Old 06-16-2013, 10:26 AM
 
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New regional bank aims to grow Appalachian economy

"There's a stigma in Appalachia that says, 'You're profoundly rural, you're profoundly uneducated and you're remote, and we're not going to spend the time to get in there and provide you the financing,'" said Ray Moncrief, who stepped in with a $6 million line of credit through a local community development fund, the Kentucky Highland Investment Corp.

Quote from the article above.

So the powers that be seem to think Appalachia has something going. What could that be?
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Old 06-16-2013, 10:46 AM
 
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Maybe they are just lying through their tooth about giving them money.
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Old 06-16-2013, 10:59 AM
 
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It's a program through ARC (Appalachian Regional Commission).

ARC Launches Appalachian Community Capital Initiative to Build Access to Credit in Region - Appalachian Regional Commission

Created because Appalachia doesn't have much going for it, not because anyone thinks otherwise.
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Old 06-16-2013, 11:51 AM
 
Location: Pennsylvania
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Quote:
Originally Posted by mathjak107 View Post
Maybe they are just lying through their tooth about giving them money.
Now that's just wrong.
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Old 06-16-2013, 12:49 PM
 
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First the people have to want banks that lend savers money before much happens usually. This is a every danger time for small banks but if they think its works its his money he is investing hopefuly. I hope it works but when last I read over 500 regional banks have failed since 2008 :I wouldn't hold my breathe.
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Old 06-16-2013, 07:21 PM
 
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Quote:
Originally Posted by yarddawg View Post
It's a program through ARC (Appalachian Regional Commission).

ARC Launches Appalachian Community Capital Initiative to Build Access to Credit in Region - Appalachian Regional Commission

Created because Appalachia doesn't have much going for it, not because anyone thinks otherwise.
But yet this so-called mysterious "ARC" must be getting finance from somewhere. I read the "about" page, and says it is made up of Governors from the different states. Like they can start banks eh. Who and where are these shadowy benefactors?
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Old 06-16-2013, 08:30 PM
 
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Quote:
Originally Posted by NJ Brazen_3133 View Post
But yet this so-called mysterious "ARC" must be getting finance from somewhere. I read the "about" page, and says it is made up of Governors from the different states. Like they can start banks eh. Who and where are these shadowy benefactors?
ARC isn't that mysterious, they've been around since the '60s, created by Congress. They're responsible for the highways and indoor plumbing where I live. TVA took care of the electric. When a small town in the Appalachians has an infrastructure project they can't figure out how to fund they go to ARC and they help them find the money and complete the application process. Usually grants with a match required, sometimes loans.

The new regional bank is in response to a study that determined a lack of access to business credit (far worse than the nation as a whole) was crippling the economy in the area. The initial capitalization is a mix of government money, grants from philanthropic foundations and commercial banks. The board of directors is composed of 13 community development funds.
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Old 06-17-2013, 09:54 AM
 
Location: Tennessee
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Quote:
Originally Posted by NJ Brazen_3133 View Post
New regional bank aims to grow Appalachian economy

"There's a stigma in Appalachia that says, 'You're profoundly rural, you're profoundly uneducated and you're remote, and we're not going to spend the time to get in there and provide you the financing,'" said Ray Moncrief, who stepped in with a $6 million line of credit through a local community development fund, the Kentucky Highland Investment Corp.

Quote from the article above.

So the powers that be seem to think Appalachia has something going. What could that be?
There's a lot wrong with Appalachia and many of the entrenched problems haven't been addressed at all or addressed sufficiently.

1) Many areas still lack basic infrastructure found most everywhere else in the country. I went to southwest VA to see my grandparents Saturday. The street they live on was only paved by the government within the last five years or so. They are only four miles from the city limits of a town of 50,000 Municipal water, cable TV, broadband internet, and reliable cellular service are lacking in many areas. Satellite service isn't viable in many areas due to the steep terrain. This results in an area that is still highly cut off from the outside world and/or many processes are extremely inefficient compared to better areas.

2) Schools are of notoriously poor quality. Teacher pay, partly due to the small tax base, is very poor, so many high quality teachers will just leave to go to a better praying area. There is a culture of apathy toward or even suspicion of education in Appalachia. Illiteracy and the high school drop out rate are still high compared to most everywhere else. It's hard to progress if education is treated with contempt.

3) Part of the reason Appalachians have contempt for education is a lack of available quality jobs which require an education. People in this area have traditionally worked in resource gathering or manufacturing. Many of these jobs are long gone or are not viable any longer. The jobs that remain are typically low value work, like home health aides and nursing home work, or call centers and other outsourced business processes. Incomes are very low on average.

4) In spite of the nostalgic image of country folk all gathering at the community church every week, much of Appalachia has a seedy underbelly of social and cultural rot. Drugs, particularly prescription painkiller abuse, meth, and bath salts, have ruined many families and communities. Domestic violence, property crime, and assaults are all high. Public assistance and out of wedlock births are far too common. Law enforcement is often underfunded and stretched too thin. The situation is quite similar to inner city problems. Here is an article from the Blaze, not a liberal news source by any stretch, about poverty, crime, and bad education in Appalachia

Record-High Teen Pregnancies, Drug Overdoses, Imprisoned Parents, Illiteracy: You Won’t Believe What ‘War’ W. VA Schools Are Facing | TheBlaze.com

I think one reason that lenders are hesitant to lend to business startups in the area is that the average person here has little left over after basic needs are met (if they can meet them all without public assistance) that there is very little disposable income. It's difficult for business to thrive in such poor areas, so the business is likely to be a bad credit risk.

Truthfully, I also would guess that there are few businesses starting in the core of Appalachia. The region doesn't have the educated workers necessary needed to compete in today's economy. The business that would be organically starting would be things that must be performed on site.
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Old 06-17-2013, 11:03 AM
 
Location: "Daytonnati"
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^
probably service industries.

ARC in Kentucky, as I recall it, was more of a infrastructure program, building a lot of roads. The ARC also funded a library construction program, if I recall right.

The idea was to apply third-world development concepts to appalachia, since the thinking was that this was like an internal third-world resource extraction/subsistence economy, underdeveloped with little social or economic capital and weak infrastructure.

This bank concept is also a borrowing from the third world, as in micro-lending or microenterprise pionneered by the Grameen Bank of Bangladesh.
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Old 06-18-2013, 09:58 AM
 
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One would think that with Appalachia, simply because they're so far behind on so many indicators, there would be a very high return on any investment that produced even small progress in economic development. Similar to economic growth in the Southeast during the second half of the 20th century.
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