Keepseagle and Pigford

Here's a piece on the Keepseagle class action suit, which follows in the footsteps of Pigford. Unwittingly, the author may reveal some of the Catch-22 qualities of the FSA loan program.  The farmer given the most attention in the piece cites the discrimination he encountered.  He's described as saying: "After the regional office denied him a loan at 4 percent interest, Porter said he received an 8 percent interest loan through a private bank. He purchased the acres he lives on now, but he said the high interest has put a strain on his finances."

Now FSA's lords  in Congress have laid down commandments to FSA bureaucrats, and to the Farmer's Home Administration bureaucrats before 1994, which go something like this:

• thou shall lend to the new farmers, to the historically disadvantaged, and to the needy
• thou shall never compete with private enterprise, so thou shalt not lend to someone who can receive a loan from local banks
• thou shall not lose money on bad loans
• honor the maxim, late money is worse than no money.

Now, in theory, if the local banker is prejudiced and the FSA bureaucrat is not, there are opportunities to make good loans.  Of course the FSA bureaucrat isn't usually some stranger, she's someone from the locality, or at least the state, so if the banker is prejudiced it increases the chances the bureaucrat is also prejudiced.

Or maybe the local banker runs out of money to loan.  In that case FSA bureaucrat could, in theory, step in. The only problem is the running out of money is likely to occur late in the lending season, so the FSA bureaucrat's loan is likely to be late.

Now suppose both FSA and the bank have money to loan, and neither is prejudiced.  So Jane Doe goes to the bank and gets an offer of a loan at 8 percent.  She goes to FSA  but since she has a loan offer from the local bank, FSA turns her down. Or, as in Porter's case, FSA turns him down, thinking it's likely the local banker will approve the loan. That could be the case, or it may be discriminatory intent.  It certainly feels like discrimination to the loan applicants.