Dole Urges Strengthening of Farm-Debt Restructuring Plan Offered by Reagan

Senate Majority Leader Robert J. Dole put his weight behind efforts Wednesday to convince the Reagan Administration to strengthen a farm-debt restructuring effort announced last fall by President Reagan.

Dole and 10 farm-state colleagues, in a letter to Treasury Secretary Donald T. Regan, said the program as it stands does little for farmers having trouble paying back loans from commercial banks.

The group also called for appointment of a presidential task force to find more long-term solutions for the farm-debt dilemma.

Caught in Squeeze

Farmers have been caught in a squeeze between high interest rates on the money they must borrow each year to plant crops and buy equipment and the falling values of the crops and land they use for loan collateral.

The senators asked that the $650-million program of loan guarantees--announced last September on the eve of a farm-state campaign swing by President Reagan--be liberalized to make it more attractive to commercial banks.

As now set up, the program requires participating banks to immediately write off at least 10% of a farmer’s loan principal in order to bring the size of the loan payments within his reach.

But the senators called on the Administration to allow banks instead to write down interest rates on the loans. Proponents say that would provide the same relief to farmers, but keep the loan principal intact and spread out the financial impact on rural banks over a longer period of time.

“For farmers who depend primarily on commercial bank financing, the program (as currently structured) provides very little assistance,” the group wrote.

The Farmers Home Administration said that of the promised $650 million in loan guarantees, only about $25 million has been used to date.

Meanwhile, several Republican House members Wednesday discussed the issue with Budget Director David A. Stockman, whom they blame for the shortcomings of the credit aid plan, and emerged to report no progress on the issue.

They said Stockman appeared to be bound by a rigid belief that the free market alone should determine which farmers stay in business.

“I’m not interested in his philosophical virginity, I’m interested in results,” Rep. Douglas K. Bereuter (R-Neb.) said of Stockman. “If he is allowing the rural structure, the banking structure to go down, then I am in favor of his removal.”