FCS Financial: One Hundred Years July 2016 | Page 58

got overextended. When the value of the collateral dropped, then
they needed more collateral. Everything just seemed to snowball.”
Jim Zerr, who worked closely with Meredith on the final merger
that created the current FCS Financial organization, also saw where
the farmers and lenders both contributed to the situation. “Farmers
quit diversifying. They were encouraged to specialize in either dairy
or beef or hogs,” he said. “Then in the 1970s, the Land Bank was
encouraged to lend money and they raised the loan-to-value in order
to reach an 80 to 90 percent loan approval.”
In the early 1980s, loan volume in the Farm Credit System
reached $80 billion as farmers, anticipating commodity prices and
land values would continue rising as they had in the 1970s and
spurred by low interest rates and looser lending restrictions, went
deeply into debt. Unfortunately, the Glory Years were about to come
to an end. “The big crush,” Jim Zerr said, “was when the government
let the interest rate go up.”

Pete Nall helps a young FFA winner manager her calf and her trophy, 1979.

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Selected References