Opinion ID: 545560
Heading Depth: 2
Heading Rank: 3

Heading: The Senate Report

Text: 58 In forwarding the Act to the floor of the Senate, the Senate Committee on Agriculture, Nutrition and Forestry stated that the Act called for a major reorganization of the credit delivery mechanism for American agriculture to assure economic security for the family farmer and rancher and stability of the Farm Credit System. S.Rep. 230, 100th Cong., 1st Sess. 21 (1987). One of the major elements of this reorganization was the mandated restructuring of distressed loans. This was necessary because System lenders were not restructuring when restructuring was cost-effective. The Act 59 requires that System banks and associations receiving assistance must, in turn, assist troubled farmers and ranchers by restructuring their delinquent loans where that restructuring is less costly than foreclosure. Each Farm Credit System (FCS) District, that contains a System institution certified to receive assistance, must establish a Special Asset Group to review each loan of a distressed farmer or rancher that is slated for foreclosure. 60 These restructuring procedures were modeled after the St. Paul FCS District's restructuring program--farmers had their loans restructured when that was beneficial both to the System and the farmer. This program has helped thousands of needy farmers and has generated income for the System. Applying these procedures nationally will help alleviate a major drain on the System.... 61 Id. at 3. The Senate Report notes that the Senate bill granted farmer-borrowers specific rights to ensure an accurate determination of whether restructuring was cost-effective. 62 Title IV provides farmer-borrowers with important rights--including the right to loan information (regarding differential interest rates, and loan origination charges, changes in interest rates and loan options) and the right of first refusal to repurchase or lease land formerly owned by a borrower that has been foreclosed on by a System institution. Providing borrowers with advance and accurate loan information will allow them to make better informed financial decisions. 63 Also, banks and associations will be required to use Credit Review Committees to review denials of new loans and restructuring of distressed loans. In order to both assist the institution, by creating earning assets, and to help the family farmer in all System institutions, the distressed loans of family farmers must be restructured under Title IV if the cost of restructuring is less than the cost of foreclosure. 64 Id. at 4-5 (emphasis added). 65 By granting farmer-borrowers certain specific rights, the Senate also intended to remedy many of the drastic consequences, caused by the agricultural depression of the 1980s, including the tremendous number of foreclosures forcing farm families out of their homes. 66 The agricultural depression of the 1980's rivals that of the 1930's in terms of its impact on farmers. 67 . . . . . 68 Farmers who either began operating in the 1970's or significantly expanded their operations in this period are most affected by the decline in land values because they have the greatest amount of debt. However, even farmers with no debt, who are close to retirement, have seen their net worth and hence their retirement savings stripped away by the collapse of farmland values. 69 While debt has fallen significantly in the last three years the burden has not been uniformly reduced. Many of those reducing their debt holdings were able to do so because they had relatively low levels of debt relative to their income. Most disturbing to the Committee, the other major group causing the fall in debt has been those farmers forced off their farms as a result of their inability to meet their commitments to lenders. While roughly 40 percent of farmers have no debt some 10-12 percent of farmers holding 37 percent of the total debt are in extreme financial difficulty. 70 Id. at 14. 71 Senator Boren (D-Okla.), the Senate manager of the bill, stated upon introduction of the bill to the Senate floor: 72 All institutions must restructure an eligible borrower's nonaccruing loan if: first, it is cheaper to restructure than to foreclose; second, the borrower is applying all income over and above necessary and reasonable living and operating expenses; third, if the borrower has the financial capacity and management skills to protect the collateral; fourth, if the borrower is capable of working out existing financial difficulties. 73 . . . . . 74 Borrowers who request an appeal to the credit review committee may also request that an independent appraisal of the collateral securing the loan be conducted. If an independent appraisal is requested, the committee must consider the results of the independent appraisal when making its final determination on the loan. 75 133 Cong.Rec. S16831 (1987) (emphasis added). While the Harper court considered Congress' concern for the overall solvency of the Farm Credit System in the various legislative reports to indicate that Congress did not intend to create a private cause of action, Harper, 878 F.2d at 1177-78, the majority simply concludes that the conference committee's decision to eliminate the express cause of action is both the start and end of an inquiry under Cort v. Ash. The majority thereby ignores all other indicators of congressional intent, and its inquiry is inconsistent with Thompson, 484 U.S. at 179, 108 S.Ct. at 516. See also, supra note 4.