DEBT SETTLEMENT ACTIVITY

Each year we have reported on progress being made to remove bad ebts from the books. This has been a large undertaking because of he many depression born accounts taken over from the Farm Security Administration and the Emergency Crop and Feed Loan Division f the Farm Credit Administration. I think a good job has been done applying our statutory debt settlement authorities in such a way s to give due consideration to the circumstances of the borrower, he history of the indebtedness and consideration for the intent of he statute.

In reviewing the situation today we find that about $291,500,000 f rural rehabilitation loan indebtedness and $123,829,000 of emerency crop and feed loan indebtedness was taken over by the Farmers Home Administration on November 1, 1946. As of June 30, 1958, he rural rehabilitation loan indebtedness had been reduced to 14,600,000 and the emergency crop and feed loan indebtedness to 7,150,000. Actual collections on these two loan programs during his period were $262,130,000, of which $212,070,000 was principal nd $50,060,000 was interest. A total of $179,133,000 in principal was written off and judgments were taken for $2,376,000 in principal. The debt settlement activity is a part of the general statutory auhority available for all loan programs including by recent amendment the emergency loan programs.

Mr. Chairman, that concludes my formal statement. I'll be proud and happy to be of any service to you that I can.

DISTRIBUTION OF PRODUCTION SUBSISTENCE LOANS

Mr. MARSHALL. I wonder if you could tell us, Mr. Hansen, how you distribute funds to the various States on the basis of production ubsistence loans. What sort of formula do you use in distributing production subsistence loans?

Mr. HANSEN. Pretty much based on history. Mr. Barnard can give us the rundown to it, on the details of it.

Mr. BARNARD. The actual process we go through is this. The Statistics Branch prepares 5 or 10 different schedules showing possible distributions. For example, one schedule is based on the Farious classes of farms which would produce the estimated number of low income farmers that might be expected to need assistance.

Other schedules show the history of the loaning by States over the ast 8 or 10 years and the estimated amount of the funds that would be needed to take care of subsequent loans to borrowers already indebted, so as to arrive at the remainder that might be distributed to States for new borrowers. In the final analysis, the principal factor in the distribution has been the historical distribution.

ALLOCATION OF OPERATING LOAN FUND TO MINNESOTA

Mr. MARSHALL. How much did you allocate to the State of Minnesota for the fiscal year 1959?

Mr. BARNARD. The initial operating loan allocation to Minnesota, Mr. Marshall, is $4,200,000, which is still the amount allocated.

Mr. MARSHALL. In addition to that $4 million, the State of Minnesota has Rural Rehabilitation Corporation. How much money was available in that last year?

Mr. BARNARD. Well, there has been a new development on the Rural Rehabilitation Corporation assets. As you know, Minnesota is the corporation with probably the largest assets. This year, there has been a policy determination to return the assets of these corporations to the States as soon as this can be done in a practical way.

In the case of Minnesota, there has been no action so far, but in order to preserve the assets in as good a condition as possible and to simplify the process of returning the assets, we have not used any of the Minnesota corporation funds for operating loans except for some supplemental loans to borrowers already indebted to the corporation. Mr. MARSHALL. What is the current balance of that fund?

Mr. BARNARD. The allotment we made to them for that purpose was $151,000. We have now invested

Mr. MARSHALL. You misunderstood me. What are the cash assets of that corporation?

Mr. BARNARD. I don't have them here, but I think the cash assets are around $1.8 million. The total assets are around $3,600,000. We have invested about $1,400,000 in Treasury 91-day bills.

Mr. MARSHALL. When you allocate your initial allocation of $4 million to the State of Minnesota, what credit do you give to that State fund?

Mr. BARNARD. I think I am right in this. Maybe someone would want to correct me. But in determining the distribution of the regular loan funds, the corporation funds are not taken into account. That might mean, of course, that if Minnesota's initial allocations from the regular loan funds were reduced in previous years because of the use of State corporation funds, they might be similarly less in the current year.

That is your point, I guess.

Mr. MARSHALL. You allocated in your initial loan operation $4 million for this fiscal year.

Mr. BARNARD. $4,200,000.

Mr. MARSHALL. How much additional have you allocated?

Mr. BARNARD. There has been no additional allocation to Minnesota so far. February 28 obligations were $2,027,000. In addition, $345,000 was set aside on February 28 for loans to indebted borrowers. So they have a balance of $1,828,000 for new borrowers as of February 28, from the $4,200,000.

Actually, the correspondence I have seen is that Minnesota doesn't anticipate that they would need more than $4,200,000 this year.

Mr. MARSHALL. During the fiscal year of 1958, how much did you allot to Minnesota?

Mr. BARNARD. In fiscal year 1958, we allocated from the regular operating loan funds $4,200,000.

Mr. MARSHALL. Of that $4,200,000, then, did you allot any tional to Minnesota?

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Mr. BARNARD. Yes, sir. At the tail end of the year, when the funds were being pooled, Minnesota obligated an additional $275,000, so they finally obligated $4,475,000, but the initial allotment was $4,200,000.

In addition, on the Corporation funds, Minnesota used $292,000, of which $275,000 was for subsequent loans, and only $15,000 for initial loans so the sum of the total operating loan obligations in Minnesota in 1958 was about $4,770,000. At the end of the year, there was an unused allotment of corporation funds of $704,000.

ALLOCATION OF OPERATING LOAN FUNDS TO STATES

Mr. MARSHALL. I think it would be desirable to place in the record at this point the amount of money that you have initially budgeted to each State, the subsequent amount of money that you allotted the State, and the amount of money that was finally obligated at the end of the fiscal year 1958; and do you have the figures as of February 28?

Mr. BARNARD. Yes, sir.

Mr. MARSHALL. Could you give us those figures and your estimate as to the balance of this fiscal year?

Mr. BARNARD. Yes, sir.

Mr. MARSHALL. Fine.

(The material requested follows:)

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