(Reuters) -- Earlier this week, an Iowa banking regulator raised a warning flag about soaring agricultural land values, telling a congressional hearing that the U.S. farm land bubble could burst and unleash a fresh set of economic problems. "If there has been too much leveraged or loaned against the inflated value of farm land, the bubble will burst, and we will once again experience an economic crisis similar to that of the 1980s," Iowa Superintendent of Banking Thomas Gronstal told the Senate Banking Committee. Gronstal, who represented the Conference of State Bank Supervisors, was one of several regulators who testified about the subprime mortgage and credit problems that banks are facing. "In the future, should the price of corn, soybeans and other commodities decrease, the price of farm land would most likely also fall." The average value of U.S. crop land hit a record high of $2,700 per acre in 2007, compared with $1,340 per acre in 1998, according to USDA data. The value of crop land in some key Midwestern states was much higher, with Illinois averaging $4,460 per acre in 2007, the data showed. State banking regulators are preparing to handle a rising number of bank failures. "Based on current information and conditions, we do not expect widespread failures," Gronstal said.
