Ailing Farm Credit System Seeks Bail-Out

The financially ailing Farm Credit System asked Congress today for a $6-billion bail-out over the next few years, saying it had “no other choice” in order to survive.

The bail-out request is coupled with measures providing tighter regulation of the system and a more centralized internal structure.

“Absent government financial assistance, the system cannot survive the radical transition under way in agriculture,” Ray Moss Tucker, chairman of the Farm Credit Council, the system’s lobbying arm, told a House Agriculture Committee hearing.

“Our request for federal assistance today is one of the most difficult decisions which we have ever made as an organization, but frankly speaking, we have no other choice,” Tucker said.

Recent financial reports have shown that the 37-bank system, the nation’s largest farm lender with $70 billion in outstanding loans, has $13 billion in problem loans. The system suffered losses of $522 million in the third quarter of this year, and more losses are expected.

“Our problems are driven, not by the actions of a single borrower or association . . . but by an industry being torn apart by large supplies, declining exports, deflation and some of the highest real interest rates in history,” Tucker testified.