After 11 years of operation, the Federal Agricultural Mortgage Corp., better known as Farmer Mac, has captured only 1.2% market share, according to a report by the General Accounting Office.
Farmer Mac, a quasi-government agency, creates a secondary market for agricultural mortgages by bundling loans it purchases and selling them to investors. It was designed to make more credit available in rural areas.
The GAO report noted, however, that 61% of Farmer Mac's $1.93 billion of assets are held in non-farm-related investments. The study also questioned whether the agency would remain profitable if interest rates rise or loan quality deteriorates.
Richard H. Baker, the chairman of House Banking's capital markets subcommittee, said the panel would review the GAO report and determine whether Farmer Mac is needed. The missions of other government-sponsored enterprises, such as the Federal Home Loan banks and Farm Credit System, may overlap with Farmer Mac, he said.