Seven years ago, taxpayers wrote a $187 billion check to bailout two government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, because of their irresponsible lending.
And the Farm Credit System (FCS) might be next up at bat.
The FCS has extended frivolous loans for decades. Its notorious history includes irresponsible loans to golf courses, huge utility companies, and multinational corporations, all while young and beginning farmers languish from lack of investment. Already far away from its mandate, the FCS has strayed even further. Luxury housing is the name of its game now, and the FCS is going full speed ahead. While they have unabashedly advertised for recreational properties in high end magazines in the past, take note of these newer ventures: luxury properties in Hawaii.
The FCS’ listings for luxury properties on Hawaii are numerous, and barely meet the standards of agricultural land, no matter how hard the FCS tries to spin it. Take, for example, this property in Honokaa. The FCS boasts the property’s “swimming pool and tennis court plus a two bedroom 1 bath caretaker cottage,” all for a whopping $4.25 million. Another property in Kamuela is on the market for $5.7 million, and it’s unsurprising, given the opportunity it provides for “swimming, snorkeling, diving kayaking, fishing & hiking,” and easy access to “seven golf championship courses, shopping and fine dining.”
While the FCS aggressively pushes luxury housing instead of “providing loans, leases and financial services to farmers, ranchers and rural businesses,” warning signs of a housing bubble are on the rise. Dean Baker, an economist and co-director of the Center for Economic Policy Research, has warned of a looming housing bubble, and calls the prospect “very worrisome.”
The last time a housing bubble burst, taxpayers ended up footing the bill for Fannie Mae and Freddie Mac. How long will it take before taxpayers are forced to foot the bill for the FCS?