The House leadership, undeterred by a barrage of criticism from the White House and two powerful, turf-conscious House committee chairmen, set the stage yesterday for a floor showdown next week over controversial farm credit legislation.
The bill, designed to pump an unspecified amount of federal aid into the independent Farm Credit System (FCS) and to direct major changes in procedures of the Farmers Home Administration, was cleared by the Rules Committee for debate Monday.
"There will be a bloodletting," said a source at the House Agriculture Committee, which rushed the bill to approval on the eve of the August recess under orders from House Speaker Jim Wright (D-Tex.).
The FCS, which holds about one-third of the nation's farm debt, has told Congress that it will need a $6 billion line of credit this year to avoid collapse after a string of record losses.
Wright had directed that the measure be ready for floor debate when the House returned after Labor Day, but its progress was slowed this week by a flood of objections at the Rules Committee.
Reps. John D. Dingell (D-Mich.), chairman of the Energy and Commerce Committee, and Fernand J. St Germain (D-R.I.), chairman of the Banking, Finance and Urban Affairs Committee, objected to a section that would create federal guarantees for a secondary farm real estate market.
They were joined by the Reagan administration, former Federal Reserve Board chairman Paul A. Volcker, House Minority Whip Trent Lott (R-Miss.) and several other legislators, the Consumer Federation of America and Public Citizen Congress Watch.
They contended that the bill exempts the secondary market from federal and state securities laws, that it might weaken the FCS by skimming off its best loans and that it could saddle taxpayers with additional costs in making good losses that might occur.
The Agriculture Committee included the secondary market provisions at the insistence of some members and commercial bankers who expressed reservations about legislation that provided aid only to the Farm Credit System.
The section authorizes federal guarantees for pooling by banks of farm real estate loans that could be resold to investors, much like the secondary market structures that exist for home mortgages. Proponents argue that the secondary market will provide farmers lower interest rates and more competition for their business.
Dingell, whose committee oversees securities matters, complained that, in July and August, he spoke to the House leadership and Agriculture Chairman E (Kika) de la Garza (D-Tex.) about his "substantive and jurisdictional problems" with the secondary market section.
"There has been no response to our concerns," Dingell told the Rules Committee. A de la Garza aide said, "My perception is that he is not correct."
Dingell's and St. Germain's committees were granted review powers on the section, but Dingell said that neither panel had sufficient time for its work. Dingell indicated that he would fight on the floor to remove the section from the bill.
A Senate Agriculture subcommittee, meanwhile, began final work yesterday on its version of an FCS bailout.