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Mr. COMBEST. So that would include
Ms. COOKSIE. Yes, it would.
Mr. COMBEST. OK
I would recognize Mr. Stenholm.
Mr. STENHOLM. Thank you, Mr. Chairman.

Those were some excellent statements and you did a great job of summarizing the additional problems that we have to try to solve. I think I will just associate myself with all of your remarks.

I've got a few questions I would like to ask. You state the comparison and the success rate on the reduction of the delinquency in the direct lending comparing December 1995 with 1996. You did not state the comparison of the guaranteed loan portfolio comparison with December 1995. Did we also see a reduction in the numbers of delinquencies in guaranteed loans from 1995 to 1996?

Mr. HALL. It's a slight increase on the delinquency rate on the guaranteed loans. It's today at 1.79 and it was just a little above 1.25 at that same time, year before.

Mr. STENHOLM. On what total guaranteed volume?

Mr. HALL. The total volume is about $6 billion and there was a slight increase in the guaranteed volume from this time last year.

Mr. STENHOLM. So, we went from $6 billion in outstanding FSA guarantees in 1995 with a 1.25 delinquency, to $6.4 billion with a 1.79?

Mr. HALL. Yes, sir.

Mr. STENHOLM. One area that Mr. Combest did not mention is the area of training for the borrower. We've talked about training for employees. But if there is one area of great frustration that I have heard, it is the training that was required in the 1990 farm bill for borrowers. The additional cost, $1,000, $1,500, $2,000, sometimes more that was required of borrowers that were already in financial difficulty, but yet had to find that money in order to pay someone to package that loan. That packaging, I suspect, might contribute to this stack of applications.

Where are we on that in light of now, we have a concern that many have not gone through the training, or perhaps will not meet the standards that someone may be setting for that training and might be declared ineligible for a loan because they did not do what somebody—and I would add, this did not originate in the House of Representatives. This was one of those wonderful Senate additions to the 1990 farm bill.

Ms. COOKSIE. Jim, would you address that, please?
Mr. RADINTZ. Certainly.

Yes, Congressman Stenholm, we recognize that the borrower training program has not always worked. I think one of the other statements that was given us this morning said that it really sounds like a good idea and it looks great on paper, but it loses something in the implementation. I know

Mr. STENHOLM. Whoever said that is a very wise person.

Mr. RADINTZ. We've been working with Harold Bob and his staff in Texas. Quite frankly, I think some of the problems that you're hearing about are particular to the State, partly because of the size; partly because of the nature of agriculture.

As Ms. Cooksie mentioned, especially in the guarantee program, there have been some concerns and we do have a legislative proposal that will be coming forward to basically exempt guarantees, I believe, from that requirement.

On the direct side, we're still working on that. We have been working closely with Mr. Bennett and the other SEDs to help them work through some of the problems. Our position is that if someone has not been able to meet the training requirements because there was no program available and in some states and I think in some areas of Texas, that has been a problem where there just were not providers, vendors as we call them, available that we would certainly not hold that against the person. There have been a few cases that we've had reports of where people just—they signed the training agreement and later refused to participate, thinking that at some point, things would change and the requirement would go away. If we and they both agreed, we intend to hold them to the agreement.

Again, if there were problems and there were not vendors available—and I know from my conversation with Chris Aimen on Mr. Bennett's staff, there were places in Texas where, you know, it just was not possible for someone to get the training that they had agreed to, we certainly plan to be understanding and to work with those folks.

Mr. STENHOLM. Mr. Chairman, I think this is one area that as you consider legislation, that USDA will submit that this is one area where I would hope that you would pay some particular attention to perhaps the need of even changing the law as it was written in 1990. Otherwise, we could very well have some very bad situations of which no one intended. But many times, the best intentions go astray because of the lack of practicality.

Mr. COMBEST. Ms. Cooksie, if I-
Mr. STENHOLM. Sure.

Mr. COMBEST. Are you intending to address that in your legislative proposals?

Ms. COOKSIE. We're going to address the guarantee program. We had not planned to address the direct program training.

Mr. COMBEST. Well, we certainly-Mr. Stenholm's point is very well taken. Thank you.

Mr. Stenholm.

Mr. STENHOLM. Ms. Cooksie, has USDA as yet studied the impact of the Agricultural Market Transition Act, otherwise known as Freedom to Farm, as to how this may or may not affect agricultural lending in 2002, or 2000, or 2001, or 2005? Has anyone, as yet, had an opportunity to look at that?

Ms. COOKSIE. I don't think we've done any bona fide studies, no. I honestly don't think we have. If we have, I'm not aware of it, sir.

Mr. STENHOLM. In regard to the FSA, I'm well aware that everyone was not really happy with the concept of an FSA approach or a USDA service center. Having spent a good part of 4 years developing the law and then having it passed, I'm well aware that there were divisions of opinion regarding the advisability, feasibility, practicality thereof. But having believed very strongly in the approach, I have not lost my enthusiasm for making it work. To say that we're disappointed at where we are today, not due to our local employees—that's not where the problem has been. The problem has been at the top. Different levels of the top above the local em

ployees who for, whatever reason-some perhaps valid, some not so valid.

This is where we, on this committee have been derelict in not having this oversight hearing 2 years ago and followup one year ago. That we have had to wait until Mr. Combest gets to be the chairman before we start the oversight to where we can work in a partnership to correct those. Because part of that foot-dragging that has occurred has contributed greatly to the problems of which Mr. Combest has talked about. And to those who continue to want to drag their feet, they're going to have to come up with a simple answer to a simple question, “How are we going to maintain unnecessary bureaucracy in the delivery of services to our farmers?

That's the fundamental question. How can we put together a service team, Team USDA, whatever? We seem to have trouble with acronyms, but really, we're talking about the Team USDA and how we might deliver the services. Today, we're talking about farm credit. I'm hopeful that Chairman Smith will convene an overall oversight hearing, or perhaps it will be the Department Operations Subcommittee, to look at the total concept of FSA.

But the problems we've experienced by the lack of enthusiasm from some in Farmers Home has contributed greatly to the problems of our farmers. That's my personal opinion. I would like very much to see some of that worked out. I think we're already beginning to have a debate regarding whether or not county employees can supervise Federal employees. I strongly feel that we ought to just separate those two today. Since everybody is being paid by the same taxpayer, everybody's working under the same rules, everybody's salary, everything is the same, we ought to just eliminate that. It was ridiculous to me that it was ever an issue to start with, but it was made an issue.

I hope we can work that one out. I know you're working on that. I just state this today to emphasize that as we get further into the oversight of FSA, this is one member that's going to be asking a lot of very pertinent questions. And I say this in the spirit of saying that if my opinion turns out to be wrong after we've had a thorough airing and a consensus, then I would be the first one to say some of the opinions that I hold are wrong and we'll go in a different direction. But so far, I have seen no one offer a constructive suggestion of how we do better. It has all been criticism of what we have been supposedly told to do. That's one area that we'd better work out pretty soon.

You know, the whole idea of Farm Credit Act of 1992 and the certified lending, I thought we were moving towards a little more reliance on private lenders and making certain we had the proper oversight since we have taxpayer dollars involved, but not the dotting of every i, and the crossing of every t and all of the problems that Mr. Combest thought of. That's one area that the sooner we can make some progress in that area, the better off we're going to be.

Ms. COOKSIE. That's right.

Mr. STENHOLM. The Certified Lender Program, all of those issues really, the foot-dragging that has occurred at the top has created the problem, not at the bottom.

My time has expired. I have another round of questions, but I will yield now to Mr. Thornberry and then we'll come back.

Mr. COMBEST. Mr. Thornberry.
Mr. THORNBERRY. Thank you, Mr. Chairman.

Two of the problems that I hear about a lot, one of which is the thing that Mr. Combest is talking about right up here. Are you all doing anything to try to reduce this burden that it puts not only on the borrowers, but also, it seems to me, on your local employees? What we're talking about a lot today is how they can keep up with the requirements that are demanded on them. If they had a few less forms to worry about, for example, that might help reduce that burden. Is that something that the Department is looking at?

Ms. COOKSIE. Yes, it is.
Jim, do you want to address a few things about that?
Mr. RADINTZ. Yes. Thank

you, Carolyn. Let me just say in relation to the guaranteed program, and I don't know the specifics of these two examples here. Over the last couple of years, we have made, I think, some significant strides. We eliminated 11 different forms and consolidated and combined into one application form. We've put in provisions that allow the lender to submit financial documentation on their own forms—their own application, their own balance sheet, their own cash flows in an effort to cut down on some of this duplication.

What we have found is that sometimes this has been lost in translation. Sometimes, or more than sometimes, our field staff, with the best of intentions, have not felt comfortable making decisions based on the reduced amount of information. We have worked with the folks here in Texas. I sent a senior member of my staff out here just a few months ago to meet with all the credit officers in Texas in a training meeting that was, I think, very successful, to emphasize to them the importance of not requiring more than what the regulations absolutely require.

We are continually working to streamline and reduce. One of our frustrations is that unlike a bank or the Farm Credit System, we are a direct Federal agency and therefore, we have to comply with a lot of other requirements and get many additional certifications. Things like people have to certify that they haven't or won't use any part of the loan proceeds to lobby for the loan. They have to, you know, certify that they have never been convicted of dealing drugs and so forth. And there are a lot of these kinds of things that, again, have real good intentions but at least from the standpoint of our programs, probably don't have much of a payoff. And I think that is a part of the burden. We're always looking for new and innovative ways to try and mitigate or reduce this.

Mr. THORNBERRY. Well, I would just encourage you to keep after it. There may be some changes Congress needs to make to remove some of those requirements. We may need some slightly different regulations. But we also can learn some things probably from the private institutions and how they go about their business. I hope we have an open mind and a willingness to try to reduce the burden that adds to the cost and hurts the service, I think, for everybody in this area.

Mr. Bennett, I wanted to ask you, you have given us a lot of information about the speed of loan processing and so forth. It does look like things are improving. From my experience and just from what I've heard in my district, it varies widely from place-to-place. I wonder, from your perspective, one, were you short of folks to deal in this area, farm lending? Did you not have enough people and was that part of the problem? Is it getting better?

Second, within the State, does it work for you, or would it work for you, to have a team of folks that would go in and help that particular county that's behind until they can catch up, of course during the season that it's a particular concern so that it can be evened out a little bit more?

Mr. BENNETT. Yes. And may I be frank?
Mr. THORNBERRY. That's why we're here, sir.

Mr. BENNETT. I'm glad you asked if we were short because we were short. During the transfer of function, we were supposed to have I think there were 227 employees that were supposed to come over to FSA from the legacy FmHA. In actuality, there were less than 170, I believe. We have about 50 vacancies. Now, I'll say this. Washington helped expedite that where we could fill some of those vacancies, but expediting is relative. It still took us 6 months. So, yes, we were short. We were short last January, last November, last December, and then all during last year's loan season.

I think another problem, and I appreciated Congressman Stenholm and you all talking about consistency. I think this probably affects our record and our service and our feelings out in the field from our bankers and our producers more than anything else. That's something that we've got to work on. We can not continue to have a district director servicing five or six different counties, or five or six different counties by several different directors, and the banks all—a bank may have three branches in three different towns working under two or three district directors and we're requiring two or three different things, or two or three different sets. I think we've got to be consistent, but I also think we've worked towards that and are working towards it.

As far as the delivery and what-have-you, and can we move people around? I'm especially proud of a couple of counties just right here close to Lubbock. We had one and I'm not going to call any names of the county, but it probably was one of our biggest messes in the State a year ago. A change in personnel and a change in directions and this, that and the other, it's probably one of our most efficient counties now. So, I think the people play an important role and I think our attention to detail-it shouldn't be detailed as much as this. By the way, this a complete guaranteed application. I think as long as we are moving in the right direction, we're all right, and I think these particular counties are. Because we've gone from like a 45- to 50-day turnaround, to a 10-day turnaround there.

As far as jump teams and what-have-you, we were willing last year and now to use any means necessary to bring jump teams in. Washington has been very helpful on that. They have sent jump teams in from other states. I think that's the only way we're going to get caught up on our loss claims being taken, was with that help. Within the State, we detail people from areas that aren't necessarily real heavy workload at any given time. As you know, in Texas, our loan season goes year-round, from the valley to the plains. It runs constantly. But it's seasonal in each area. So, we

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