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because we were taking camployees out of their workplace. However, we felt the long-term benefits of a kuphly trained work force wouid altimately prove to be invaluable and offset the sorte, negative effects. Our goal is to deliver a high quafity md timely service to our

Before I get into the report on our current status and our plans for the future, I would likce to point out the progress we have made to date.

As you know, Mr. Chairman, change is always hard, and we have bad our share of troubles as we have implemented USDA's reorganization, bowever, by June 1996 we had made more loans to more producers for more dollars than at the same time the year before. We zocomplished this an addition to reducing our delinquencies. At the same time we also were implementing disaster assistance in more than 200 coumties affected by the drought, plus implementing the provisions of the Federal Agriculture Improvement and Reform Act of 1996 (1996 Fan Bin) in record time.

Od the following pages we will provide exhibits and information on the current status of agricultural credit as it relates to those programs administered by the FSA in Texas. We have included all information as of December 31, 1996, that reflects the number of borrowers, the amount owed, delinquencies, and timelines required to complete the low making process. We have provided pertinent information regarding the direct and guaranteed loan program, possible effects of the 1996 Fum Bin, and hopefully, some discussion points that will enable us to deliver

Our programs in a more efficient manner.

We have some very specific goals for 1997 and plans to achieve those goals. Our first

goal is to complete all loans in the mandated time by April 1, 1997. To accomplish this will require cooperation by all interested parties, including producers, bankers, and the FSA. We will

continue training all FSA increase our pool of well-trained employees. We have

already increased the number of employees with low-approval authority which will expedite


We have taken and will continue to seek many steps to provide assistance to our loan

officers to expedite approval and the loan application process. We plan to use our contracting

wthority, possible reassignments of temporary details, and the use of overtime to provide the

manpower to expedite loan processing.

Our second goal is to settle all guaranteed loan loss claims in a timely and current

manner. We will continue training our employces and customers to prepare and analyze

applications and loss claims in a proper and consistent manner. We have already begun the

process of streamlining the review process and will continue to use District Directors and State

Office personnel to expedite settlement of loss claims.

Our third goal is to continue the reduction of our delinquent direct loan accounts. These

delinquent accounts have accumulated for several years. We hope to reduce the delinquent dollar

abount by S100 million in 1999. We have several employees who spend a considerable amount

of time in the resolution md settlement of these accounts.

Our fourth, and possibly most important, goal is to provide more courteous, more professional, md more timely service to all of our customers in an efficient manner. The institutional challenges and changes required of us by the merger of the former ASCS and FmHA were probably greater than my of us had anticipated. We certainly struggled with the laws pertaining to supervision of federal and non-federal employees in the same workplace. All of our employees have remained willing and dedicated to providing service to producers.

In closing, let me again thank you for coming to Lubbock, Texas, and for allowing us this opportunity to testify before this Committee. We remain commined with you to provide better service to our customers -- for our Government.


Exhibit 1...................Direct Loans and Direct Borrowers

Exhibit 2...................

Guaranteed Loans and Borrowers

Exhibit 3................Certified Lender Program

Exhibit 4................Comparison of Obligations Table

Exhibit 5...................Loss Claims Paid Table

Exhibit 6...................Delinquency Reduction

Exhibit 7...................Delinquency Reduction Continued

Exhibit 8, 9..............Guaranteed Loan Tracking

Exhibit 10.................Direct Loan Tracking

Exhibit 1-1


There are 8,144 Direct Borrowers - $851,237,556 principal, and $252,806,402 interest owed for a total owed of $1,104,043,958. There are 116,261 total borrowers nationwide. Texas has seven percent of the borrowers and eight percent of the dollar amount owed.

Of the $1,104,043,958 owed on direct loans, we have $406,136,624 delinquent or 36.79% of dollars delinquent.

Of the 8,144 direct borrowers, 40 percent or 3,258 are delinquent. These 3,258 owe $711,512,862.

The 8,144 borrowers have 23,793 loans outstanding.

Partial breakdown excluding operating loans:

751 economic emergency

6,901 emergency

4,274 farm ownership

348 soil and water

3 recreation.

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