"They may oppose bailouts, but it looks like they are getting one themselves," said Tony Plath, a national banking expert and finance professor at UNC-Charlotte. Plath called such a large bank write off "highly unusual" even in the current economy.
"Would your average borrower get a deal like that? Probably not," he said, noting that many consumers have struggled to get their loans adjusted.
Citing a confidentiality agreement, Graves and Rogers declined to comment on the arrangement that reduced the loan to $1.2 million.
"A positive solution was reached many months ago by all parties involved, and due to the terms of the agreement, I am not able to make any further comment," Graves' chief of staff Tim Baker said in a statement.
Rogers' top aide, Adam Pipkin, said the Woodstock Republican is no longer even a guarantor on the loan since last year's deal.
"He has met all the terms of his agreement," Pipkin said.
What started out as an ambitious plan by two elected officials to transform a rundown residential hotel along I-75 in Calhoun into a money-making venture collapsed into a recession-era cautionary tale, complete with a loan default, a bank failure, unpaid city tax bills, an allegation of embezzled money and foreclosure proceedings.
Court documents show that Graves and Rogers were struggling to make payments almost immediately after they signed the loan documents with Bartow County Bank in 2007.
In late 2009, with Graves preparing to run for Congress and the economy souring, he and Rogers began to distance themselves from the hulking Oglethorpe Inn. They transferred ownership of Tich Hospitality, which owned the hotel, to John Edens, the hotel's manager -- a man who had previously filed for bankruptcy.
Still, as guarantors on the loan, the lawmakers remained financially linked to the 52-room inn that rented rooms for $139 a week. The bank sued them for default in January 2010. They filed a counterclaim arguing that bank officials reneged on a pledge to refinance the loan.
Soon, Bartow County Bank had joined the ranks of Georgia banks shuttered by federal regulators. In April, 2011, it was acquired by Hamilton State Bank, which inherited the dispute with Graves and Rogers.
With the case heading to court last summer, a deal was struck but was cloaked in the secrecy of a confidentiality agreement. The parties involved would not say who sought the agreement. But public records examined by the AJC show the loan was modified to $1.2 million, shaving more than $1 million off the original principal balance. It comes due in February 2015.
Edens, the manger-turned-owner, said the bank took the hit for the the remaining balance. "They wrote it off," he told the AJC.
Edens and Rogers both signed the August 2011 loan modification document. Rogers signed on behalf of a separate company he operates with Graves. A spokesman for Graves confirmed to the AJC that Graves is still a principal in that company.
Graves and Rogers' lawyer, Simon Bloom, would not confirm details of the settlement arrangement, he said he was unaware of either lawmaker cobbling together a large payment to help satisfy the debt.
“I don’t know of either of the defendants coming up with $1 million to bring the balance down,” Bloom said. He refused to provide more specifics.
Some say Graves and Rogers should disclose the terms of their agreement with the bank.
"As elected officials it seems like it would be in their best interest to show that they were not given any special consideration," William Perry, head of the watchdog group Common Cause Georgia, said.
The FDIC will almost certainly be on the hook for a large portion of any loss. When Hamilton took over Bartow, it entered into a so-called loss share agreement under which the FDIC will absorb up to 80 percent of losses stemming from the old bank's bad loans.
While the FDIC insurance fund that will make the payments is funded through bank fees, the FDIC is also underwritten by taxpayer money. And Plath noted, bank customers, who are also taxpayers, are ultimately footing the bill.
"Where do the banks get those fees?" he asked.
Graves in particular has been outspoken against bailouts. The Republican from Ranger was a state lawmaker when he took out the loan in 2007. In 2010, just months after Bartow County Bank filed a lawsuit against him for default, he won a special election to fill the unexpired congressional seat of Nathan Deal, who left to mount what would become a successful run for governor.
A tea party favorite, Graves has said he opposes taxpayer-funded bailouts. He also cast a vote against increasing the federal debt ceiling.
Rogers, of Woodstock, has pushed a fiscally conservative agenda as the No. 2 in the state Senate. In a web ad, he portrayed himself as “the taxpayer’s best friend.”
Cartersville lawyer Morgan Akin, who was the chairman of Bartow County Bank, doesn't see it that way. He said the lawmakers' loan default "contributed significantly" to his bank's failure and accused them of being irresponsible with their personal finances.
Today, the hotel sits abandoned and strewn with filthy furniture and broken glass. Calhoun City Attorney Bill Bailey calls it an eyesore and a nuisance. He said he hopes its location along I-75 will attract a commercial developer. The state Department of Transportation is planning to expand the interchange in 2015, Bailey said.
""It will take some demolishing, but it has great potential," he said.
Edens -- who said he was working repossessing cars before Rogers tapped him to manage the hotel -- has long since walked away. Ownership of a failed hotel is only one facet of his legal troubles: a restraining order obtained by his ex-wife led him to voluntarily wear an ankle bracelet.
"Good gracious no," Bailey said with a laugh, when asked whether Edens ever stood chance of repaying the loan. "They transferred the property to a man wearing an ankle bracelet. What did they think was going to happen?"