Farm Loans: Actions Needed to Safeguard Taxpayers' Interests (Testimony,
05/18/95, GAO/T-RCED-95-194).

The Consolidated Farm Service Agency's farm loan programs have generated
huge losses--$12.5 billion during fiscal years 1989-94. About 98 percent
of the losses, or $12.2 billion, has occurred in the direct loan
program.  Additional losses can be expected because delinquent borrowers
held about 26 percent of the agency's $18 billion direct and guaranteed
loan portfolio as of September 30, 1994.  Most of these
delinquencies--$4.6 billion out of $4.8 billion--were in the direct loan
program.  Several factors have contributed to the direct farm loan
program's financial vulnerability.  First, the agency's field offices
have not consistently implemented lending, servicing, and property
management standards intended to protect the government's loan
interests.  Second, some of the agency's loan policies expose the
program to losses.  For example, a borrower may obtain a new loan
despite being delinquent on another loan.  A third, and perhaps more
fundamental, source of problems is conflicting program objectives.  The
agency's mission--to provide temporary credit to high-risk farmers--is
often at odds with normal fiscal controls designed to minimize risk and
financial losses.  GAO recommends strengthening loan policies as well as
further clarifying the agency's basic mission.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-RCED-95-194
     TITLE:  Farm Loans: Actions Needed to Safeguard Taxpayers' Interests
      DATE:  05/18/95
   SUBJECT:  Farm credit
             Direct loans
             Government guaranteed loans
             Loan defaults
             Agricultural programs
             Federal property management
             Risk management
             Lending institutions
             Losses
             Loan repayments
IDENTIFIER:  FmHA Direct Farm Loan Program
             FmHA Farm Ownership Loan Program
             
------------------------------------------------------------------------

We regret that electronic text of GAO Testimony is not available at 
this time. 

See the GAO FAQ - Section 2.0 for printed copy ordering information.
The FAQ is automatically retrieved with all WAIS search results or 
can be obtained by sending e-mail to: [email protected]