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Democrats Blast New Farm Credit Rules

March 12, 1987

WASHINGTON (AP) _ The Reagan administration’s proposed tightening of Farmers Home Administration credit rules would freeze out at least half of current borrowers, Senate Democrats declared Wednesday.

″I have looked at the proposed regulations and what I see deeply disturbs me,″ Chairman Patrick J. Leahy, D-Vt., told a Senate Agriculture Committee hearing marked by blasts at FmHA from Democrats and a scarcity of Republicans.

The session afforded lawmakers an opening to vent concern over existing FmHA credit policies as well as the proposed regulations.

At one point, Sen. Tom Daschle, D-S.D., told FmHA Administrator Vance Clark that agency relations with South Dakota farmers were so badly frayed that ″the only way we can address the issue adequately is for the state director to resign.″

″It’s time for him to resign,″ Daschle repeated later, apparently referring to Dexter Gunderson, a former Republican speaker of the South Dakota House who has headed the FmHA in that state since 1981. Clark did not reply to Daschle’s comments.

Reached in Huron, S.D., Gunderson declined to comment on Daschle’s remarks except to say that the same federal laws govern FmHA directors in every state and ″you can’t do anything in this agency that Congress won’t let you do.″

Meanwhile, senators weighed possible action to block the proposed regulations, which range from a switch to commercial bank credit standards by the traditionally lenient ″lender of last resort″ to stepped up proceedings against farmers who find themselves in arrears.

Sen. Kent Conrad, D-N.D., told the panel that a General Accounting Office study shows 50 percent of current borrowers would be barred from applying for loans under the regulations. He said 17 percent would be overqualified and could thus be turned away.

Senators said the proposal would violate the letter of federal law and a congressional intent to preserve FmHA’s longstanding role as a lender that looks beyond the bottom line and seeks to keep the family farmer afloat.

″We can’t just wash out farm families simply because of some hidebound, un-American attitude that we ought to wash out farm families,″ Sen John Melcher, D-Mont., told the committee.

Clark, appearing briefly before the panel, said the regulations the agency is proposing as an economy measure contain no violation of law. He also took issue with estimates that 50 percent or more of current borrowers would become ineligible.

But Clark acknowledged that 18 percent of current borrowers would become ineligible for continued credit under the regulations.

One of four state attorneys general who appeared before the committee, Robert Spire of Nebraska, told the panel that he believed the 50 percent figure was closer to the correct one. But he added that even 18 percent would be ″appalling and devastating″ for his state.

The regulations would ″cripple the farm recovery in our state,″ said Attorney General Roger Tellinghisen of South Dakota.

″The answer is not to go to court,″ declared Attorney General Hubert H. Humphrey III of Minnesota. ″We have a crop season coming on and Mother Nature doesn’t want for courts.″

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