Remember the "Farm Crisis"?
(Page 2 of 8)
November/December 1996
By Joel Dyer, Boulder Weekly (www.boulderweekly.com)
As if monopolies weren't enough of a problem, the federal government has increased the interest rates on its loans to troubled farmers to ridiculous heights, sometimes more than 15 percent. And, as many bitter farmers will tell you, the only reason many of these loans exist is that the government's Farm Home Administration (FMHA) agents sought out farmers in the '70s and encouraged them to take out loans. The government agents told them that the value of their farms was inflating faster than the current interest rates and that to turn down a loan was a poor business decision. During that time, FMHA lenders received bonuses and trips based on how much money they lent. When land values tumbled in the '80s, the notes were called and the farms foreclosed. Ironically, bonuses are now awarded based on an agent's ability to clean up the books by foreclosing on bad loans.
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In Oklahoma, the government is foreclosing on Josh Powers, a farmer who took out a $98,000 loan at 8 percent in 1969. That same loan today has an interest rate of 15 percent. The angry farmer claims that he has paid back more than $150,000 against the loan, yet he still owes $53,000. Says Powers, "They'll spend millions to get me, a little guy, off the land--while Neil Bush just walks away from the savings and loan scandal."
The 1987 Farm Bill allowed for loans such as this to be "written down," allowing farmers to bring their debt load back in line with the diminished value of their farms. The purpose of the bill was to keep financially strapped farmers on the land. But in a rarely equaled display of government bungling, this debt forgiveness process was left to the whims of county bureaucrats with little or no banking experience.
As Wallace says, "Imagine the frustration when a small farmer sees the buddy or family member of one of these county agents getting a $5 million write-down at the same time the agent is foreclosing on [the small farmer] for a measly $20,000. It happens all the time. When these little farmers complain, they're given a telephone number in Washington. It's become a big joke in farm country. I've even tried to call it for years. You get this recording and nobody ever calls you back.
"These farmers are literally at the mercy of these county bureaucrats, and some of them are just horrible people. If they decide they don't like you for any reason, they can destroy your life: hold back your seed money till it's too late to plant or call your note because the value of your farm--on paper--has dropped below what you owe. We've had to intervene several times to keep farmers from killing them."
According to Wallace, thousands of people have died as a result of the farm crisis, and not just from suicide. The psychologist says the number of men and women who have died of heart attacks and other illnesses--directly as a result of stress brought on by foreclosure--dwarfs the suicide numbers.
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