A group of bankers that advises the Federal Reserve’s Board of Governors has warned that farmland prices are inflating “a bubble” and growth in student-loan debt has “parallels to the housing crisis,” Bloomberg News reported yesterday. The concerns of the Federal Advisory Council, made up of 12 bankers who meet quarterly to advise the Fed, are outlined in meeting minutes obtained by Bloomberg through a Freedom of Information Act request. “Agricultural land prices are veering further from what makes sense,” according to minutes of the council’s Feb. 8 gathering. “Members believe the run-up in agriculture land prices is a bubble resulting from persistently low interest rates.” The Fed first lowered its target interest rate to near zero in December 2008 and has pledged to hold it there until the unemployment rate, currently 7.5 percent, falls to 6.5 percent. The council regularly advises the Fed on an array of lending, economic and regulatory topics. The bankers last year shared their view of the growth in student lending. “Recent growth in student-loan debt, to nearly $1 trillion, now exceeds credit card outstandings and has parallels to the housing crisis,” the council said in its Feb. 3, 2012, meeting. The trend has continued, with the Consumer Financial Protection Bureau saying in March 2012 that student debt had topped a record $1 trillion. The bankers said student lending shares features of the housing crisis including “significant growth of subsidized lending in pursuit of a social good,” in this case higher education instead of expanded home ownership.
