House Panel Votes Bill to Reform Farm Credit

The House Agriculture Committee late Wednesday passed and sent to the full House an emergency rescue package for the ailing Farm Credit System, the nation’s largest farm lender.

The panel passed the legislation on a voice vote just a day after the Senate endorsed a nearly identical bill. The dual votes improve chances that action will be taken to shore up confidence in the system before Congress adjourns for the year.

The bill would centralize the system’s loosely linked finances and strengthen the Farm Credit System into a true arm’s-length regulator, as well as providing standby authority for federal financial aid if it is needed.

Committee Chairman Kika de la Garza (D-Tex.) said the measure would be expedited to a full House vote, perhaps as early as Friday, so that minor differences with the Senate version could be worked out by the time of Congress’ scheduled Dec. 13 adjournment. And a Reagan Administration representative, Asst. Treasury Secretary Charles Sethness, said he was aware of no major problems in the bill that would prompt a presidential veto.

Both Sethness and congressional backers of the bill said it would go a long way toward quieting nervousness among investors who buy Farm Credit System securities and thus provide the money for the system to loan to its one million farmer-borrowers.

Noting the speed with which the measure has been pushed through Congress--a little more than a week--Sethness observed: “If this isn’t an expression of the interest of government in the continued survival of the system, I don’t know what is.”

The system, which is federally sanctioned but owned by the farmers who borrow from it, is a network of 37 banks in 12 regions that lend almost exclusively for farm purposes.

System officials have projected its first net loss in decades for 1985. Further losses are expected in 1986 and 1987, prompting pleas from both the system and its regulators for a $6-billion federal bail-out.