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O N TOP of the savings and loan scandal, another government-backed financial institution, the Rural Electrification Administration, is facing defaults on billions of dollars of loans, and the taxpayer could again end up the loser.

The REA dates back to the New Deal era, having been formed in 1935 to bring electricity to rural America. It did this by giving low-interest loans to rural electric cooperatives. There are today some thousand such co-ops with loans totaling $36 billion.

Unfortunately, the REA recently estimated that $2 billion of these loans will never be repaid.

The rural co-ops have traditionally purchased their power from private electrical utilities and distributed it to their customers. There was minimal risk in loans to such co-ops.

But in recent years, some have gotten themselves into financial trouble with grandiose plans for building their own expensive power plants. Some have tried nuclear power.

Obviously, the REA, like any lending institution, must carefully monitor the loans it makes, and it would not have found itself in its present plight if it had been more prudent in granting the loans.

To make matters worse, from the taxpayer's point of view, most of the REA's bor rowers today are not tiny rural co-ops bringing the marvels of electricity to remote areas. Most loans now go to suburban areas, retirement communities and vacation resorts. There is no reason in the world why wealthy ski resorts in Aspen, Colo., should be getting subsidized 5 percent loans at the taxpayers' expense.

The REA is a perfect example of a fine concept that has largely outlived its usefulness. There is hardly a farm in the entire country that is not now electrified, but the agency lives on, justifying its existence by granting its subsidized loans to areas that don't need them.

The Bush administration, like the Reagan administration before it, has tried to save money by eliminating these unjustified subsidies. But a powerful combination of a rural electrical lobby and rural members of Congress has so far blocked change.

The REA continues to ride on a reputation built in the Depression era. Former President Jimmy Carter once said he recalled the bringing of electricity to his community as one of the greatest days of his life.

But that was half a century ago, and there is no excuse for continuing a program whose purpose has largely disappeared. And it will be an even greater insult to taxpayers if they are asked to pay not only for subsidies, but for bailouts on defaulted loans.

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