FMHA COULD LOSE SEVEN BILLION DLRS IN LOANS
The Farmers Home Administration, the
U.S. Agriculture Department's farm lending arm, could lose
about seven billion dlrs in outstanding principal on its
severely delinquent borrowers, or about one-fourth of its farm
loan portfolio, the General Accounting Office, GAO, said.
    In remarks prepared for delivery to the Senate Agriculture
Committee, Brian Crowley, senior associate director of GAO,
also said that a preliminary analysis of proposed changes in
FmHA's financial eligibility standards indicated as many as one
half of FmHA borrowers who received new loans from the agency
in 1986 would be ineligible under the proposed system.
    The agency has proposed evaluating applicants' credit using
a variety of financial ratios instead of relying solely on
cashflow ability.
    Senate Agriculture Committee Chairman Patrick Leahy (D-Vt.)
slammed the proposed eligibility changes, telling FmHA
Administrator Vance Clark at a hearing that they would mark a
"dramatic shift" in the agency's purpose away from being farmers'
lender of last resort toward becoming a "big city bank."
    But Clark defended the new regulations, saying the agency
had a responsibility to administer its 70-billion dlr loan
portfolio in a "compassionate yet judicious manner."
    Crowley of GAO, Congress' investigative arm, said the
proposed credit scoring system attempted to ensure that FmHA
would make loans only to borrowers who had a reasonable change
of repaying their debt.
 Reuter
