Banks are resisting the Byden administration’s push to offer $ 4 billion in debt relief programs to minority farmers, saying government initiatives to repay borrower loans will hurt financial institutions’ interests and investors. ..
The American Bankers Association, the Independent Community Bankers of America, and the National Rural Lenders Association, three of the largest banking groups in the United States, say the program will repay loans early and lose interest that can be collected from farmers. The New York Times reports.
Their dissatisfaction comes after a white farmer who claimed they were a victim of reverse discrimination sued the USDA.
Debt relief for minority farmers came from a $ 1.9 trillion stimulus package passed by Congress in March. No money has been allocated yet.
Banks say the federal government should pay the bank extra money, not just repay the loan. That way, the bank and its investors will not lose the interest income or money they earn from reselling the loan to other investors.
They also said they would like other investors who bought loans in the secondary market to get some government funding to cover the losses they face from early repayments.
USDA officials said bank lobbyists are calling for changes in their repayment programs and want the federal government to pay farmers’ loans instead of clearing all debt at once.
Banks have also warned that they are reluctant to credit loans that are repaid quickly, which could cause further harm to minority farmers in the long run.
An organization representing black farmers says the bank, which it proposed to Secretary of Agriculture Tom Vilsack in a letter in April, poses a threat to prevent the government from taking action.
However, government officials say that making concessions to banks puts an undue burden on taxpayers, and under the law, governments pay interest costs or repay investors from the secondary market. Said he couldn’t.
Officials who demanded anonymity said they hoped the USDA could launch a debt relief program in the coming weeks.
Under the Relief Act, a “needed amount” is provided through the Treasury to help ethnic minority farmers and ranchers repay loans guaranteed or granted through USDA.
Most loans are made directly, but about 12% go through the lender and include a USDA guarantee.
According to the Congressional Budget Office, preparing to grant a loan will cost $ 4 billion over a decade.
Black-owned farms, on the other hand, have declined from about 1 million in 1920 to less than 40,000 today, and have declined for years due to industry consolidation, high lending terms, and numerous foreclosures.
Black farmers say they are angry that banks are demanding additional money.
“You have black men and women who have experienced racism and discrimination and have lost land and livelihoods, and there is the American Bankers Association, which represents the wealthiest people in the land, and they whine about money. They could potentially lose. “
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