we're not going to get more resources out in our offices. We're going to have less as time goes forward. So, we've got to take a real look at what we've done, how we do business now and streamline the entire process. Not only the guaranteed program, but everything we do, every day.

One of the things that has been a fallacy of downsizing is that we have downsized the staff. We have not downsized the paper. We have not downsized the requirements and that has to be a part of the downsizing. You can't get rid of people and not get rid of some of the paperwork involved. So, I think we're going to have to look at the entire gambit of our programs and do that, sooner than later.

I think we need to start now. We don't have the luxury to wait. We don't have the employees to do it. We don't have the luxury of having two employees do the same thing. We don't have the luxury of having a checker check the checker anymore. So, we're looking at that in farm loan programs. We've started the process to do that with all of our programs. Not only guaranteed program but the direct program, all of our programs.

We're fast coming to a point, or we are to the point when I talk to county office employees, they can't get their work done anymore. It's very stressful for them. We're asking them to do things. We're putting requirements on them that they do not have time to do. So, we're going to have to look at the whole process. We're going to have to change the way we do business in farm loan programs.

Mr. COMBEST. Well, in the concept of Farm Loan agencies, the idea was to have a number of people who can perform various duties. Let's say you take an office where you've had an FHA director for several years and we've been combined now into, again, an FSA. As you're talking about your training, training the other people in the office, whose decision is it to begin to allow other people to actually get into the day-to-day activity involvement then of a loan? Is it the county supervisors? Is it district directors? Does it come from the State level? Who makes the decision when à person should be able to start helping to spread that workload in the county?

Mr. BENNETT. The district director should direct all agriculture credit and have the supervision, and overall supervision of an agriculture credit office. But the_CED and that supervisor within a county and as you know, in Texas, we have several districts that are multi-county which sets two different kinds of problems.

Mr. COMBEST. Right.

Mr. BENNETT. But I think the key to it is that CED and the supervisor working in conjunction with each other through the direction of the district director.

Mr. COMBEST. Well, in an instance where a CED is ready to start doing that or making suggestions but seems to be getting no cooperation, how would one suggest that one goes about curing that? Mr. BENNETT. We fully intend for the CEDs to be involved in the loan making process and we have some less than 70 miles from here that are. We have some that aren't. We have some that have been more aggressive than others. Our biggest problem have probably been walls. And I don't mean just the walls in a building or

down the street. We have some buildings where we've taken down the walls but there's an invisible wall there.

We visited about 15 or 20 offices in the last 2 days and we found one county office where there was an actual, what we call, full merging of employees where they're interspersed, intertwined and there's this activity of all employees being involved in different parts of it. That's what we want to move towards. I think that's where we have to get to. I think when we get to that point, where they're trained, where they're working together, they're not worried about who's called boss, or who's dictating or this, that, and the other. They're worried about getting that service to the producer. But the district director is ultimately responsible for the overall direction of credit within his or her district.

Mr. COMBEST. Mr. Stenholm.

Mr. STENHOLM. I'm going to pose this same question to the banking panel in just a moment. It struck me as rather unusual, Ms. Cooksie, of you suggesting, and Mr. Bennett, your response, that somehow placing a county elected committee in the position of a bank board or a loan committee of a bank board is something that we shouldn't even consider because if we did that, there would be all kinds of resignations. I say that in the light of I understand that there are many bank board directors that are becoming more and more concerned about even serving as a bank board director because of the possible liability of the decisions that they make regarding some of the same law.

But I'm going to pose this as a rhetorical question, not for an answer today, but more of expressing my opinion that if we were starting from scratch, we would have a loan committee. You know, most banks have loan committees but they also invest in their president or CEO or lending authorities, certain freedoms that they can make subject to them losing their job if they make bad decisions. But you give a certain amount of freedom to make those decisions and it works pretty well in private banking and PCA lending, et cetera. Boards of PCAs extend to their chief executive officers, presidents, that lending authority.

It seemed to me that what we've got to look for is a marriage, a perfect marriage between the two. If we try to separate one from the other, it creates the problem. You know, that's one of the areas that's going to have to be worked out. But I understand the liability concern. But by the same token, as Mr. Combest just pointed out, the value of an advisory committee advising whoever it is making those loans, I don't know how we can do better. Part of the problem we've had in the past is that this decision has been made by the FHA personnel. That wasn't perfect either, as we looked at it, because therein is some of the problem. You invested in a quote and I say this affectionately since a bureaucrat. You know, that is it.

I guess we don't want to spend all the time on this panel, but I want to use the remainder of my time here to set the proper tone for the FSA, at least from this Member of Congress' eyes and perspective.

There has been a lot of opposition to the FSA concept. That's the understatement of the day. The foot-dragging, the downright opposition, and perhaps some it has merit. In fact, I would say some

39-584 97-2

of it has merit. But today, we have a goodly percentage of the Congress that want to abolish the FSA. That it has served its use. We no longer need it. Farm programs are being phased out. There is no need for a FSA office.

We saw last year in the farm bill, the removal of the FCIC from the FSA. Federal Crop Insurance convinced the Congress that they have no valid reason for being a part of the FSA. We created, instead of downsizing and reducing the bureaucracy, we up-sized and increased the bureaucracy. Because instead of having FCIC as a part of FSA, we said "No, we're going to have a separate entity and we're going to go off in another direction." I know for a fact—and we'll talk about this at the proper hearing, but I'll mention it today-instead of utilizing the trained personnel that we had available in the FSA offices, FCIC in their supreme wisdom, would fly people from Minnesota down to Texas to make one or two claims adjustments when we had properly trained, hired by, paid by the same taxpayer, people available in the counties in Texas. And yet, they circumvented you, Mr. Bennett, and all of your dedicated employees because they had to do it their way, and they had the money.

This is one of the statements that I really like to hear. "We had the money to do it." You're telling us that you have not had enough personnel in cases, but you have worked together with the folks at this table. You've done the best you could. But they had the money to fly, in one case, two people from Minnesota, made a few adjustments, rented two cars, drove halfway across Texas, made a few other adjustments, when at every step of the way, we had properly trained personnel there to do the job. Now, that is ridiculous.

And now, my colleagues, we're going to have to come up with 200 or 300 million additional bucks for the Federal Crop Insurance Program, and that's awfully important. The safety net in the Crop Insurance Program is absolutely life and death to not only Texas, but a good part of the rest of the United States. And yet, the management-and here the belief by some, that there is no role of the Federal Government even though we put over a billion dollars, and we're probably going to have to put more to get a proper safety net under our agricultural systems really bugs me. We'll have those questions for them.

But I want to say this to set the proper tone. NRCS, it used to be the Soil Conservation Service. Here, again, many of us thought that it would be very proper to put them in the FSA. That there were certain efficiencies that could be gained by having check writing, various administrative duties done in an FSA office and letting our soil conservation personnel do what they are trained to do, and that is provide the technical service. Soil conservation, now NRCS, comes to this committee and says "We've got to have more money. We don't have the personnel out there to administer the programs that we have. We need more money." But yet, we have had a consider amount of foot-dragging about the proper relationship between the FSA concept.

And now we talk about farm credit today and we've known and we've talked about that enough, but we've had some difficulties, some of which was in the legislation. And we can address that, and I believe the chairman has indicated his desire to look at proposed

changes. I certainly will support him on that. But if we choose to go our separate ways, then I have to ask the question, “Where are we going to get the money?" All three of us at this dais, at this moment, are in favor of balancing our budget. We do not hold any illusions of gaining additional funding for agriculture. Any funding that we're going to find in order to provide the necessary service, the research, and the safety net are going to have to come from us gaining efficiencies out of the available dollars being spent.

Here, I just so strongly believe that we could, by sitting down with the next panel which has been done over and over-but by sitting down one more time and listening to the private sector and looking at some of the criticisms that we have of the current system, that we could come up with a system in which we could literally, truly arrive at a Team USDA approach for the servicing of the Federal part in the kind of cooperation with the private sector that would have a great amount of support. We would see many of the complaints of the timeliness, the dotting of the i's and the crossing of the t's and all of this evaporate almost overnight.

And that's the challenge that, Ms. Cooksie, you and the Secretary above you are going to have because we're running out of time. We're running out of time on making these changes and that's why it's very timely that we have hearings like this and set the proper stage, and also then have the questions that need to be asked and answered by those of us who have the responsibility of changing the laws because some of this is going to require a law change. You know, this packaging question, we will hear fromwell, one of my constituents has expressed great concern about the packaging. Most private lenders do not require packaging of their loans in order to get a loan. That was a requirement of the 1990 farm bill and we've already agreed we're going to take a look at that, but most do not. Why do we?

Why does Farmers Home, FSA, Farm Credit, whatever we're called, why do we? It's according to the law, right? Well, you know, we could debate that, that really what was intended in all cases. But then if we have the packaging required, why do we nitpick some loans that they're not properly packaged? When every lender I know, that I've ever dealt with, they package it and you work on it and you work with that individual until you get it to where you'll either make the loan or you won't. But for us to require a packager as you can tell, it bugs the out of me. I want to see us take a look at that because that is really creating some problems from a lot of our banks that would like to be making more of these loans. But the frustration that occurs and then the timeliness on the individual, your customers, is a real problem.

Thank you, Mr. Chairman. We're looking forward to being a part of many, many more hearings and other committees as we try to deal with this question that you have convened this hearing on today, and that is an area of farm credit. It was rather interesting when you mentioned 19 percent delinquency. I was in Stevenville last night. The PCA in Stevenville told me that 19 percent of their dairy loans have been called in the last 6 months because of the problems with the dairy industry. When you're not making any money, more credit is not the answer. We've got to deal with the

price and safety net above a lot of it and it just-19 percent PCA farm credit

That's why I asked you the question, "Have we started to look at where we're going to be in 2002?" When Mr. Combest convenes this committee in 2002, or whoever is in that position at that time, what will be the tenor of the conversation at that time? It's about time we started looking at it because we're really going to have some challenges on the insurance side of this.

And I want to make it very clear, because I get in trouble every time I make this little speech. As I said, the private lending sector has a major role to play in farm credit. The Guaranteed Lending Program is the most important program for the future of agriculture. Not the direct lending-guaranteed lending. We've been talking about these problems, as Mr. Combest says, as long as he and I have known each other on the House Agriculture Committee and we have not made near the progress we should have made to this point.

In the area of crop insurance, I want to state it unequivocally, the private sector has a major role to play in the provision of crop insurance. It can not, nor should be, a Government-dominated program. But for the private sector, you have to understand, when you want the taxpayers to help subsidize that which you serve, do not expect not to have oversight. The oversight, the proper oversight, I strongly believe must come at the county level with the county elected committee system of some type, period.

Mr. COMBEST. Thank you, Mr. Stenholm.

Mr. Thornberry, do you have other questions?

Mr. THORNBERRY. Mr. Chairman, let me ask two quick questions because I know you're anxious to get on to the next panel.

Ms. Cooksie, you told us what you all are going to propose on the training program where direct borrowers don't have to go through that. What are you going to propose, or can you tell us yet on the lifetime exclusion for borrowers? How are you going to modify that? Ms. COOKSIE. What we're proposing right now is not on the direct program. The training is the guaranteed training program. Mr. THORNBERRY. I'm sorry, the guaranteed program. I misspoke myself.

But can you tell us what your proposal is going to look like as far as modifying this part that was in this last farm bill that excludes folks that have had

Mr. RADINTZ. The proposal is basically to allow people to come back at some point after some period of time has passed. I think that, you know, the amount of time should be subject to debate. Basically, that whatever the cause of the problem was has had a chance to work out, that they've reestablished their credit record. And that basically, whatever the problem was is either addressed or gone.

Mr. THORNBERRY. So, we're going to go from your proposal would change from a lifetime exclusion down to a set time period, 10 years or whatever it's going to be? 5 years?

Mr. RADINTZ. Yes, I think it would

Ms. COOKSIE. That's what we proposed to the Secretary's office for our farm loan programs.

Mr. RADINTZ. One number was 5, yes.