Rural bank representatives recently told President Clinton that community banks need partnerships with nontraditional lenders, as well as government programs.

Two bankers participated in an economic development panel, one of three at a national conference on improving rural America last week in Ames, Iowa.

Other participants included the President, Vice President Al Gore, and Agriculture Secretary Dan Glickman.

In the two-hour discussion on rural economic development, the bankers discussed ways to support rural lending.

"My most important thing that I wanted to get across is that community bankers are at the heart of rural America and have a great role shaping rural America in the future," said Jeffrey L. Plagge, chairman of the American Bankers Association's rural development task force.

George P. Surgeon, chief executive of $100 million-asset Southern Development Bancorp and Elk Horn Bank and Trust in Arkadelphia, Ark., stressed the importance of partnerships between rural community banks and nontraditional organizations like Southern Development. Such partnerships can meet communities' economic development needs, he said.

"Increasingly, as the banking industry consolidates, we're going to see more import placed in nontraditional community development forums," he said.

Mr. Surgeon also emphasized the need for federal programs such as Small Business Administration loans and the President's community development financial institutions bill, which could help rural America.

He said he hopes the forum will make people take "a real rational hard look at (federal) programs that we're scaling back."

Mr. Plagge told the panel and an audience of nearly 300 about "new tools" that his trade group has identified for rural bankers. These include taking direct equity interests in start-up and growth businesses and facilitating farm transfers to the next generation of farmers.

Farm bankers also need to find new sources of lendable funds, he said.

"I thought it was a very unique forum," said Mr. Plagge, who also is president of Waverly National Bank, Waverly, Iowa. The three political leaders were active in the discussion and knowledgeable about farm issues, he said, adding: "You don't often see that level of presentation with that level of administration."

Mr. Surgeon had known firsthand of the President's interest in development banks. When he was governor of Arkansas, Mr. Clinton played a role in bringing in Chicago's Shorebank Corp. to help launch Southern Development.

Co-hosted by the U.S. Department of Agriculture and Iowa State University, the forum also presented panels on working families in rural America and production agriculture.

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