The Farmers Home Administration has a big problem with bad loans _ about 20,000 delinquent borrowers, according to a recent report by the Washington Post. The federal farm loan agency annually writes off as uncollectable about $2.3-billion.
Some of the agency's clients are struggling family farmers. They are bad credit risks. Commercial lenders want nothing to do with them. The FmHA is their lender of last resort. Preserving family farms and helping family farmers get back on their feet are what the FmHA is about. The Post revealed, however, that the FmHA loans bushels of money to wealthy farmers and ranchers who are able to repay their debts but brazenly refuse to do so. These well-heeled growers probably never deserved low-interest federal loans. Meanwhile, their identities are kept secret by the same federal department which loaned them the money. The Agriculture Department insists upon protecting the privacy of wealthy laggards as though the public has no right to know how its money is wasted.
The Post did manage to identify a handful of rich FmHA borrowers such as John Mosby, a Southern California dentist who owns a cattle ranch in Northern California. Mosby owns an $817,000 ocean-front house, more than $3-million worth of land and an office building with an assessed worth of $1.7-million. Mosby owes more than $3.5-million in back payments on federal loans to his ranch, the Post reported, but the agency has never attempted to foreclose on Mosby in the 13 years his account has been delinquent.
How many Mosbys are out there? Who are they? How much do they owe? The U.S. Agriculture Department knows but refuses to say. Department spokesman Ken Cohen said the government's hands are tied by a 1989 U.S. Supreme Court ruling, which imposed an extremely narrow interpretation of the Freedom of Information Act. Cohen's explanation suggests departmental spin-control, except that it is supported by at least one independent source, Allan Adler, a former American Civil Liberties Union lawyer who is an expert on open-government case law. Cohen described the 1989 ruling as "one of the worst FOIA decisions ever issued."
Legal technicalities aside, the American public has a right to know who is borrowing its money and who is failing to pay it back. Public disclosure is inherent to good government. In this case, it also makes for effective policy. Publishing the names of wealthy, delinquent borrowers might shame some to repay their tax-financed debts. This tactic worked in 1992 when Congress reauthorized the Health Educational Assistance Loan Program. The new law contains a provision that allows the U.S. Health and Human Services Department to publish the names of individuals who default on medical school loans. The department published nearly 5,000 names last August. By the end of September 400 overdue borrowers were in touch with the department.
Congress and the White House have shown great leniency to FmHA borrowers. Under previous administrations, the government foreclosed on only 200 farms per year. Agriculture Secretary Mike Espy suspended FmHA foreclosures last March, saying his department had not been a good enough friend to farmers. Espy's decision is fine for farmers who cannot afford to repay their loans, but well-off farmers with delinquent debts don't deserve such a break. They should face foreclosure. If not, they at least should face public exposure. The federal government should publish their names. There is no shame in borrowing from the government, only in refusing to pay it back. It is time to take the wraps off rich deadbeats.