Black farmers fear foreclosure as debt relief frozen
WASHINGTON >> For Brandon Smith, a fourth-generation cattle rancher from Texas, the $1.9 trillion stimulus package that President Joe Biden signed into law nearly a year ago was longawaited relief.
Little did he know how much longer he would have to wait.
The legislation included $4 billion of debt forgiveness for Black and other “socially disadvantaged” farmers, a group that has endured decades of discrimination from banks and the federal government. Smith, a Black father of four who owes about $200,000 in outstanding loans on his ranch, quickly signed and returned documents to the Agriculture Department last year, formally accepting the debt relief. He then purchased more equipment for his ranch, believing that he had been given a financial lifeline.
Instead, Smith has fallen deeper into debt. Months after signing the paperwork he received a notice informing him that the federal government intended to “accelerate” foreclosure on his 46acre property and cattle if he did not start making payments on the loans he believed had been forgiven.
“I trusted the government that we had a deal, and down here at the end of the day, the rug gets pulled out from under me,” said Smith, 43.
Black farmers across the nation have yet to see any of Biden's promised relief. While the president has pledged to pursue policies to promote racial equity and correct decades of discrimination, legal issues have complicated that goal.
In May 2021, the Agriculture Department started sending letters to borrowers who were eligible to have their debt cleared, asking them to sign and return forms confirming their balances. The payments, which also are supposed to cover tax liabilities and fees associated with clearing the debt, were expected to come in phases beginning in June.
But the entire initiative has been stymied amid lawsuits from white farmers and groups representing them that questioned whether the government could offer debt relief based on race.
Courts in Wisconsin and Florida have issued preliminary injunctions against the initiative, siding with plaintiffs who argued that the debt relief amounted to discrimination and could therefore be illegal. A classaction lawsuit against the USDA is proceeding in Texas this year.
The Biden administration has not appealed the injunctions but a spokesperson for the Agriculture Department said it was continuing to defend the program in the courts as the cases move forward.
The legal limbo has created new and unexpected financial strains for Black farmers, many of whom have been unable to make investments in their businesses given ongoing uncertainty about their debt loads. It also poses a political problem for Biden, who was propelled to power by Black voters and now must make good on promises to improve their fortunes.
The law was intended to help remedy years of discrimination that nonwhite farmers have endured, including land theft and the rejection of loan applications by banks and the federal government. The program designated aid to about 15,000 borrowers who receive loans directly from the federal government or have their bank loans guaranteed by the USDA. Those eligible included farmers and ranchers who have been subject to racial or ethnic prejudice, including those who are Black, Native American, Alaskan Native, Asian American, Pacific Islander or Hispanic.
After the initiative was rolled out last year, it met swift opposition.
Banks were unhappy that the loans would be repaid early, depriving them of interest payments. Groups of white farmers in Wisconsin, North Dakota, Oregon and Illinois sued the Agriculture Department, arguing that offering debt relief on the basis of skin color is discriminatory, suggesting that a successful Black farmer could have his debts cleared while a struggling white farm could go out of business. America First Legal, a group led by the former Trump administration official Stephen Miller, filed a lawsuit making a similar argument in U.S. District Court for the Northern District of Texas.
Last June, before the money started flowing, a federal judge in Florida blocked the program on the basis that it applied “strictly on racial grounds” irrespective of any other factor.
The delays have angered the Black farmers that the Biden administration and Democrats in Congress were trying to help. They argue that the law was poorly written and that the White House is not defending it forcefully enough in court out of fear that a legal defeat could undermine other policies that are predicated on race.