Amadeusz Juskowiak

Us farm credit rescue bill seen before easter

The chairman of the Senate Agriculture subcommittee on credit said the panel will consider a farm credit rescue package by Easter even if the system and its regulator do not ask for help by then

Were going to have a bill to markup I guarantee you before the Easter recess Sen David Boren DOkla said

Senate Majority leader Robert Byrd DWVa wants recommendations on farm credit presented by April 11 when Congress is scheduled to break for Easter Boren said

Boren urged the Farm Credit Administration FCA the systems regulator to quickly make a formal request for aid

Under the 1985 Farm credit law passed by Congress the FCA as regulator is to certify when the system has exhausted all its capital and needs federal government help

However FCA chairman Frank Naylor said because much of the systems remaining capital is tiedup in legal action he could not technically certify a rescue is needed this year and perhaps not even in 1988 The other Republican member of the threeman FCA board Marvin Duncan agreed

But Boren urged that even if FCA cannot technically certify aid is needed it should request help informally

We all know we need a capital infusion Boren said

Boren and the FCA officials spoke at a hearing on the plight of the farm credit system Also at the hearing Brent Beesely chief executive of the Farm Credit Council representing the system said that at the end of 1986 the system had only 15 billion dlrs in working capital remaining after losses of 46 billion dlrs over the last two years

While he did not ask for government aid Beesley indicated the situation is serious in some of the 12 system districts

A significant number of banks and associations in the most economically depressed areas have and will continue to suffer extraordinary losses Beesley said

Jim Billington Democratic member of the FCA board said the troubles of the system have encouraged the flight of some one billion dlrs per month from the system as borrowers repay loans

The systems total portfolio shrank to 546 billion dlrs by the end of last year from 666 billion the previous year

FCA board members said both borrowers and holders of bonds in the system need to be assured their money is safe Naylor suggested the need for a federal assurance to bondholders

The bondholders have no worry at this time Billington said

Naylor said several proposals for revamping the farm credit system are circulating The proposals range from consolidation of the system into a centralized national lender to decentralizing into semiindependent institutions

But He and the system spokesman Beesley were cautious about proposals for a secondary market on farm loans Those proposals would package farm loans for resale to investors

Naylor and Beesley said a secondary market setup outside the farm credit system would hurt the system But Beesley said a secondary market with the farm credit system as its agent could be developed without Congressional legislation

Reuter