Banks urged to help rebuild Gulf Coast

NEW ORLEANS — The Bush administration's Gulf Coast recovery chief urged bankers Thursday to be "risky" and to open their accounts to help jump-start rebuilding of the hurricane-ravaged region.

"The American public knows that the banking sector has had record profits for the last four years," said Donald Powell, the coordinator of federal efforts for the area. "It's an opportunity to be generous."

Powell, the former chairman of the Federal Deposit Insurance Corp., said banks constitute the "heart and soul" of societies and play a critical role in the Gulf Coast during the current economic turmoil.

"Be innovative and take risks," he told conferees. He said extending credit is essential to spark infrastructure renewal.

As they did to other institutions, hurricanes Katrina and Rita dealt mighty blows to the Gulf Coast's banks, conferees said.

In Louisiana, safe boxes at Hibernia National Bank in downtown New Orleans got flooded. Bank branches were ripped apart, bank records were scattered and cash in ATM machines spilled into the streets.

In Mississippi, the headquarters of Hancock Bank was destroyed and hundreds of bank workers were made homeless. Backup fuel and cash were brought in with armed guards.

Fuel was a hot commodity after Katrina hit Aug. 29, and it was trucked to banks incognito because of the risk it could be commandeered by the Federal Emergency Management Agency.

John Hairston, Hancock's chief operating officer, said banks needed the fuel so employees could get to and from work. Hancock Bank trucked fuel in at night and stored it in a secret location to avoid having it seized by FEMA or robbed, he said.

Bankers said FEMA should allow banks to give workers fuel allotments without fear of it being commandeered.

"The role of the bank is so critical from keeping anarchy from happening," said D'Auby Schiel, chairman and CEO of Coast Community Bank in Mississippi.

She recalled how her banks were assailed by customers in shorts and flip flops right after Katrina, all desperate for cash. "Cash was king," she said, and "we started giving $100 a customer."

Bankers also suggested to Powell that it would help them if regulators eased rules during disasters on such things as requirements to report large cash transactions and following all the minutiae in lending laws.