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STEVE INSKEEP, host:

It's Morning Edition from NPR News. I'm Steve Inskeep. Finally, somebody knows how to run a bank in this country. We have, of course, been reporting for months on the devastating problems facing banks. So, we thought we'd visit a part of the country where the banking system is doing just fine, as far as we know. The most basic banking principal is still in force: only lend to people you know can pay you back. NPR's Adam Davidson visited the Old Order Amish community of Lancaster County, Pennsylvania.

ADAM DAVIDSON: To get your head around the strange tension of Amish life, go to a buggy auction. You are in the 21st century and you are also visiting the 1600s, all at the same time.

(Soundbite of Amish buggy auction)

Unidentified Auctioneer: Here we got new cars, wide interior, easy ride springs, LED headlights, lots of extras, one-year warda(ph), and it is ready to go...

DAVIDSON: About a dozen buggies are lined up in a muddy field. Hundreds of Amish men in a big clump follow an auctioneer with a portable loudspeaker from buggy to buggy. In a lot of ways, it's like any automobile auction. Each buggy has a big sign in the window, brand-new 2008 model. There are Amish teenager boys all around, literally kicking the tires, checking out all the new extras, like the fiberglass wind screen and, no joke, retractable cup holders carved out of maple wood. I asked two guys standing by one buggy how much it would set me back.

Unidentified Man #1: From seven to 8,000.

Unidentified Man #2: Yeah. Starting price can be six, five or six. So, are you thinking of buying one?

DAVIDSON: I live in New York City, so it would be hard to get around with one.

(Soundbite of laughter)

DAVIDSON: How old are you when you usually get your first carriage?

Unidentified Man #2: 15 to 16.

DAVIDSON: And do you work for that, or your dad will buy it?

Unidentified Man #1: Yeah, Dad buys it.

(Soundbite of laughter)

DAVIDSON: One thing that's different from car buying is that Amish people don't take out a buggy loan. In fact, most Amish don't have much debt at all. No credit cards. They pay for everything with cash or check, except when they buy a farm. That takes borrowing, and that means working with a banker. There are no Amish bankers, no Amish-owned banks. So, Amish people use the local banks. In Lancaster County, many banks have drive-through lanes specially sized to accommodate a horse and buggy. It's a favorite tourist picture. And for the Amish there's one banker above all others: Bill O'Brien. He's not Amish, but he's become a big part of the community, which means, among other things, that he loves telling jokes he heard from Amish customers. The problem is that people who don't spend all their time with Amish people, we don't get these jokes. Like, here's the punch line to one which, I guess, is supposed to be dirty.

Mr. BILL O'BRIEN (Agricultural Lending, HomeTowne Heritage Bank): Well, she says you don't get out a two-row corn picker for a little nubbin, so...

(Soundbite of laughter)

DAVIDSON: Let me tell you about Bill O'Brien. This time of year it's hard not to think of Santa Claus. He's not that big or old, but he's got a beard and laughs a lot and is just a pleasure to spend time with. He runs the ag-lending department for HomeTowne Heritage Bank. That means he's responsible for around $100 million in farm and farmhouse loans, 95 percent of which are to Amish people. So, how do you lend money to a man who wants to buy a farm, but has no credit history, no FICO score, not even a driver's license?

Mr. O'BRIEN: I'll find out who is dad was. I'm also interested in who his wife's father is. Is she from a farm? And was her father a farmer? Because it takes a team to make the farm go.

DAVIDSON:: The weird thing - or maybe it's not that weird - Bill says that the Amish are less risky than people with access to all the tools of modern banking. The Amish live well within their means, no splurging on iPods or HDTVs or dinner out that they can't afford. And the Amish think that missing a payment brings shame, not just on them, but on their whole family, their whole community.

Mr. O'BRIEN: We've never lost any money on an Amish deal, and so, I'll stretch my neck a little more for with them than maybe I will somewhere else.

DAVIDSON: Never lost money on an Amish loan, ever. He's been doing this 20 years. He's had countless thousands of loans and no problems. He says this year one guy was a few days late on one month's mortgage payment. Everyone else paid on time, every time. Now, before every banker listening decides to quit their big-city job and make low-risk loans to the Amish, you have to realize it takes a lot of work. O'Brien puts a 1,000 miles on his car every week. His customers are not Internet banking. He has to go and talk to them on their farms. O'Brien takes me to the top of a hill, and we can see dozens of farms below us. I ask him how many of these are his clients.

Mr. O'BRIEN: All of them.

DAVIDSON: Every house?

Mr. O'BRIEN: Every house.

DAVIDSON: That's a lot of houses.

(Soundbite of laughter)

Mr. O'BRIEN: I know, I know. We've got a lot of clients.

(Soundbite of laughter)

DAVIDSON: So, who is that farm right in front?

Mr. O'BRIEN: This is Chris Real(ph). He actually had to give Amos here permission to bring...

DAVIDSON: O'Brien knows every farm. He knows which are doing well, which are struggling. He has to, because when you lend to the Amish, you don't pass that loan on to some other investor. Amish loans can't be securitized; they can't be turned into a mortgage-backed security or a CDO, like all of those subprime loans that have caused so much trouble. You can't for an odd legal reason. Homes that don't have electric power don't qualify for securitization; neither do homes without traditional insurance, and Amish use their own kind of insurance.

Mr. O'BRIEN: If the guy's seven days late, if I need to, I'll go pull his beard. I mean, we always taught in our banking, that you make the loan, you collect it, you service it. If we do an Amish house, we keep it within the bank.

DAVIDSON: And it works. In this year of financial crisis, of storied old banks collapsing in hours, HomeTowne Heritage has had its best year ever. And with the total collapse of securitization and all those fancy financial tools, it's tempting to say, hey, when it comes to buying a house, we're all Amish now. Adam Davidson, NPR News.

INSKEEP: To see a slideshow on banking in Amish country visit Planet Money at npr.org/money.

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