FOR IMMEDIATE RELEASE
ICBA Asks Congress to Reject FCS Commercial Lending
Calls for Working Cooperatively with Community Banks
Washington, D.C. (March 27, 2007)—The Independent Community Bankers of America (ICBA) called on Congress to reject Farm Credit Administration proposals to expand into non-farm lending and instead work with community banks to provide credit to farmers and ranchers.
"The Farm Credit System is pursuing broad expansion powers in the legislative arena while at the same time the FCA has agenda items on the regulatory docket that would allow the FCS to broadly finance non-farm credit needs and provide financially related services," said Frank A. Pinto, president of the Pennsylvania Association of Community Bankers, testifying on behalf of ICBA before a House Committee on Agriculture Subcommittee on Conservation, Credit, Energy and Research hearing on credit availability in rural America. "The FCS is, in essence, pursuing a strategy of 'double-dipping' in an effort to become commercial banks while retaining government-sponsored enterprise status and advantages."
Community banks have consistently been the largest provider of agricultural credit within the commercial banking sector. Pinto said that in a survey ICBA recently conducted about the availability of credit in agricultural areas, all 300 respondents said that there was no lack of available credit in agricultural areas. In fact, approximately two-thirds of the community banks that responded reported having five or more competitors in their local market.
"There are numerous private sector lenders serving local markets, and agribusiness and commercial firms have no trouble accessing credit," Pinto said. He called on the FCS to seek a more constructive path and to work cooperatively with community banks to finance the agricultural sector and serve as a key source of funding for commercial banks.
ICBA vigorously opposes FCS expansion into non-farm lending either through legislation or regulation and encourages the FCS to work cooperatively with community banks. If the FCS receives expanded powers, it simply means a subsidized lender will likely drive out private sector lenders that offer specialized knowledge and services and they will no longer be able to maintain the staff personnel and knowledge base to continue to serve this sector. The result would be a drain of local tax dollars and fewer competitors serving rural communities, jeopardizing rural communities' ability to maintain their infrastructure and services.
Read the complete testimony at www.icba.org.