cancel
Showing results for 
Search instead for 
Did you mean: 

Time to privatize the Farm Credit System

http://www.zerohedge.com/news/presenting-all-wrong-america-here-top-contributor-house-agriculture-co...

 

As noted above, the # 2 and # 3 contributors to House Ag Committee Chairman Frank Lewis (R-OK) were the Farm Credit Council and The National Rural Electric Assn.

 

Much ado has been justifiably been made of the public corruption of the other GSEs (Governement Sponsored Enterprises) Fanny, Frieddie, Sally et al.

 

Ag is strong and the private market can take care of farm credit needs. Likewise for rural electrification- yes rural electric systems will pay a half point more in interest and your electric rates might go up a percent or two.

 

Time to test dedication to principle.

 

BTW, Rural Electrification stands as a wonderful example of a hygely successful social program. It also stands as something that needed to be sunsetted- its purpose was accomplished a long time ago and it became just another self-perpetuating subsidy.

 

 

0 Kudos
6 Replies
Advisor

Re: Time to privatize the Farm Credit System

Are you saying that the farm credit system, where the borrowers are the majority stockholders in the cooperative, is not a good system for agriculture?  Or?

0 Kudos

Re: Time to privatize the Farm Credit System

I'm saying that it does not require the implied public guarantee and/or the rate subsidy that is inherent in that.

0 Kudos
Honored Advisor

Re: Time to privatize the Farm Credit System

Was it Rahm Emanuel who said, "Never let a good crisis go to waste..."? 

This would be sort of the reverse situation...using a best-case scenario in ag to change long-held policies that support it, with government guarantees to see that it gets done. 

 

There are reasons for moving these functions into the private sector, I am sure.  Still, if you look bakjc less than a decade, you saw concerns, stated very effectively in the book "The End of Agricuture in the American Portfolio."  Commercial banks had moved out of ag lending in large proportions c. 2000, and even Farm Credit was lobbying Congress (Remember :New Horizons"?) to get into non-ag mortgage involvements. 

 

Thank goodness that one didn't pass, or the Farm Credit ystem could have been one of the ones needing a bailout in 2008, and the Fed could have had to promise eight trillion, instead of just 7.7....  Do we REALLY want to deal with another "too big to fail" private entity? 

 

As for REA, I think we still need some public dictates to require utility services to rural America.  We already have to deal with satellites for Internet and television.  No one wants to build the infrastructure of DSL and cable, to such sparsely-concentrated subscribers.  We can wait two weeks for repairs there. 

 

You need only speak to one honest telephone repairman, as we do, to know that the equipment we rely on in rural areas is outmoded, hard to keep in repair, and a low priority for the telephone company.  They really  only keep service to us because their definition as a public utility requires them to do so. 

 

As one of the top 25 customers of our REA cooperative, I can usually get my service back on fairly quickly, compared to a household without twelve hig houses paying a big bill every month, ust past the house on this transmission line.   They get us back up and running, to keep their cashflow doing likewise. 

 

These two entities pulled rural people out of the last Great Depression.  I am not so sure that we aren't  living through a aworse one, just well-disguised for the present.  If this ag bubble bursts, and/or if costs escalate to create a little bit tighter margin, the money flow from country to city could reverse again, and we would all have to beg for subsidized services...or, maybe services at all.   

 

0 Kudos
Veteran Advisor

Re: Time to privatize the Farm Credit System

Reading the list makes one ask a couple of questions---hearing that side of the aisle comment about the wall street protest's and these folks don't have an agenda---numbers like this pretty much sum it up--- actions of MF and Lehman give me a notion that privatization isn't ""glossy white"" as some would like to believe---maybe  MF globes problem was ""toooo  much  regulation""---         

0 Kudos
Highlighted
Contributor

Re: Time to privatize the Farm Credit System

What "implied" guarantee" and what rate subsidy???????????????

0 Kudos
Advisor

Re: Time to privatize the Farm Credit System

Yes, ag lending has never been attractive enough for big urban banks.  People also forget that back in the 19th and early 20th century, many companies were engaging in excessive monopolistic practices, precipitating the rise in populist efforts to rectify their abuses.  The cooperative system has its roots in those times. 

 

0 Kudos