Farm Loans: Actions Needed to Safeguard Taxpayers' Interests

GAO discussed the risks associated with the Consolidated Farm Service Agency's (CFSA) farm loan programs. GAO noted that: (1) CFSA farm loan programs resulted in $12.5 billion in taxpayer losses during fiscal years 1989 through 1994, most of which occurred in the direct loan program; (2) substantial additional losses can be expected because delinquent borrowers held about 26 percent of CFSA loan portfolio as of September 30, 1994; (3) the direct farm loan program has been financially vulnerable, because CFSA has not consistently implemented standards that are intended to protect the government's loan interests; (4) certain CFSA loan policies expose the program to losses and conflicting program objectives inhibit effective program management; and (5) actions have been taken recently to address program problems, but CFSA still needs to strengthen its loan policies and clarify its basic mission.