Editor’s note: The following statement was released by John Blanchfield, senior vice president, ABA Center for Agricultural and Rural Banking.
“The report issued by the Congressional Oversight Panel on TARP (Troubled Asset Relief Program) on July 21 about farm loan restructuring confirms what bankers have always known and have been saying consistently — banks work with debt-stressed farm and ranch customers to help them resolve loan repayment problems. Foreclosure is not and has never been the first option chosen. Bankers want their farm and ranch customers to be successful and they have and will work with their customers to ensure their success.
“The report also confirms the agricultural economy, despite the global financial crisis, continues to be strong and that farmers and ranchers have historically high equity levels which will serve as an important cushion should the agricultural economy decline further. The strength of the U.S. farm balance sheet gives producers and their bankers options to restructure debt if necessary. The committee was unable to find any compelling reason for wide scale farm debt restructuring.
“Further, the committee acknowledged that if a widespread problem should arise, 'Congress has other tools available that may provide indirect relief for distressed farm loans. Most troubled loan situations arise from insufficient repayment capacity. Therefore, other programs providing assistance to farmers have the potential to ease a distressed loan situation.’”
Click here to see the entire report.
Source: American Bankers Association