Examining State Loan Programs
No bank or other financial institution could remain in business if more than 60 percent of its outstanding loans were delinquent. Yet it can be done – when taxpayers’ money is used.
Last week, leaders in the West Virginia Legislature revealed an audit had produced “troubling” findings from the state Department of Agriculture. In question are practices during the tenure of former agriculture Commissioner Gus Douglass. The audit information has been turned over to the U.S. Attorney for the Southern District of West Virginia.
This week it came to light that one audit finding involved the Rural Rehabilitation Loan Program. Of the 40 loans outstanding, 25 are delinquent.
Auditors found inexcusable mismanagement, ranging from insufficient collateral for loans to potential conflicts of interest involving loan recipients and agriculture department employees.
“The rumor was, when I first took office, you better look at that loan program,” commented current agriculture Commissioner Walt Helmick.
Indeed. Clearly, that program needs to be cleaned up. But mismanagement there suggests other state loan programs should be examined, too. Legislative auditors should do so.