Post finds trouble in USDA Rural Development loans

A U.S. Department of Agriculture loan program to create jobs in rural areas "has endured nearly $1.5 billion in losses while backing almost $14 billion in guarantees to private banks," reports Gilbert Gaul of The Washington Post. "Actual losses are almost surely higher," but the Post couldn't total them because USDA "refuses to disclose losses on loans to individual companies, even after they go out of business."

This is the latest Post report on the foibles of USDA's Rural Development programs. Gaul delivers a devastating summary: "More than three decades after the loan program was created, USDA officials still don't know whether it works. Funds have gone to firms that have hired foreign workers instead of Americans. Millions more have gone to failing and bankrupt businesses. Most of the jobs are not new. Many are low-tech and low-wage."

There's a lot more, and it's not a pretty picture. "In some cases, creating a single job costs hundreds of thousands of dollars," Gaul writes. "Three-fourths of the jobs that the USDA attributes to its guaranteed-loan program are 'saved,' not new, a Post analysis found. ... Thomas C. Dorr, USDA undersecretary for rural development, did not dispute The Post's findings." He told the paper, "We are making a legitimate effort to deal with all of these issues." (Read more)