But If We Pay Off Black Farmers' Debt, How Will Big Banks Even Foreclose On Them?

Can't we just once think of the shareholders?

One of the really great parts of the Biden administration's COVID relief package is a $5 billion fund aimed at debt relief for Black, Latino, and Indigenous farmers, who were long victims of flat-out discrimination from the US Department of Agriculture's farm loan programs. It was a start at providing some belated justice for some of the most outrageous racial discrimination in the federal government — discrimination that lasted from the early years of the USDA through recent decades.

As we noted in March, the plan wasn't very popular with racists , because what about all the white farmers the USDA refused to help because they were Black? That sense that it's somehow unfair to make amends for past discrimination has led to lawsuits by white farmers, including a suit in Texas being pursued by former Trump administration asshole Stephen Miller's outfit, "America First Legal."

Today, though, we learn from the New York Times that the debt relief plan is also facing opposition from the banking industry, because if the government just goes and pays off the loans of farmers from disadvantaged communities, how is that fair to the bankers who had been counting on big interest payments, or selling off the loans to other investors? Why must it be the big banks who always take it on the chin in America? (They're made to suffer. It's their lot in life.)

As of yet, the Agriculture Department hasn't yet started paying off any loans; the program is being ramped up and is expected to help some 15,000 farmers over the next decade, starting this summer. But the banks are not at all happy about the prospect of loans being paid off in full too quickly. Three of the biggest associations of bankers, the American Bankers Association, the Independent Community Bankers of America, and National Rural Lenders Association, have been lobbying the USDA to change how the program operates. The Times explains,

Their argument stems from the way banks make money from loans and how they decide where to extend credit. When a bank lends money to a borrower, like a farmer, it considers several factors, including how much interest it will earn over the lifetime of the loan and whether the bank can sell the loan to other investors.

By allowing borrowers to repay their debts early, the lenders are being denied income they have long expected, they argue. The banks want the federal government to pay money beyond the outstanding loan amount so that banks and investors will not miss out on interest income that they were expecting or money that they would have made reselling the loans to other investors .

Like, the banks posit, maybe the government could just pick up the farmers' monthly payments, so the full interest makes it to the lenders. And also, how about some big payments to the third-party investment firms that bought the loans in the secondary market, and will now miss out on years of payments, and maybe the chance to foreclose, not that anyone wants that, heavens no.

Just to underline the point, the bankers sent a letter last month to Ag Secretary Tom Vilsack, casually mentioning that the USDA sure had a nice operation guaranteeing loans to minority farmers, and wouldn't it be a shame if banks' losses (or rather lessened profits) from the repayment program meant loans to those farmers, which, again, were guaranteed by the USDA so the banks had no risk for their profit, were harder to come by in the future?

"If U.S.D.A. does not compensate lenders for such disruptions or avoid sudden loan payoffs, the likely result will be less access to credit for those seeking U.S.D.A. guaranteed loans in the future, including U.S.D.A. farmers/ranchers," they wrote to Mr. Vilsack in April. 

So far, the USDA doesn't seem inclined to give the bankers what they're asking for, according to an anonymous USDA official:

An agency official said that obliging the banks would put an undue burden on taxpayers and that the law did not allow the agency to pay interest costs or reimburse secondary market investors. The agency hopes to be able to begin the debt relief process in the coming weeks[.]

In a rare deployment of ironic understatement, the Times notes that

While America's banks have flourished in the last century, the number of Black-owned farms has declined sharply since 1920, to less than 40,000 today from about a million. Their demise is the result of industry consolidation as well as onerous loan terms and high foreclosure rates.

For the Grey Lady, that's almost the equivalent of a dick joke.

Not surprisingly, groups representing Black and minority farmers are a bit less than sympathetic to the bankers' plight. Alabama farmer Bill Bridgeforth, a board member of the National Black Growers Council, seemed not to feel any solidarity at all with the hardworking men and women who make their livings tilling the spreadsheets:

Look at the two groups: You have the Black men and women who have gone through racism and discrimination and have lost their land and their livelihood. [...] And then you have the American Bankers Association, which represents the wealthiest folks in the land, and they're whining about the money they could potentially lose.

National Black Farmers Association President John Boyd Jr. found it all pretty rich that big banks have

never signed on to a letter or supported us to end discrimination, but they were quick to send a letter to the secretary telling him how troublesome it's going to be for the banks. [...] They need to think about the trouble they've caused not working with Black farmers and the foreclosure process and how troublesome that was for us.

That seems downright uncharitable, considering that big banks' voicemail systems always remind customers just how important their calls are.

Happily, it looks like Vilsack isn't going to back away from putting the debt relief into place; he's been going out of his way to make sure the Agriculture Department finally cleans up its act , which he needs to, considering his own shameful response to rightwing media's racist attack on Shirley Sherrod in the early days of the Obama administration, and other criticisms of USDA's fumbling response to historic racism in the department the first time he was Ag secretary. Determining to do better is nice; actually doing better is what's needed.

[ NYT / NYT / Politico ]

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