FOR IMMEDIATE RELEASE
ICBA Opposes FCS Expansion in Credit Title of House Farm Bill
Washington, D.C. (May 22, 2007)—The Independent Community Bankers of America (ICBA) expressed profound disappointment that the House Agriculture Subcommittee on Conservation, Credit, Energy and Research added provisions to the 2007 farm bill that would significantly expand Farm Credit System (FCS) lending powers.
ICBA adamantly opposes the FCS's proposed "Horizons Project" expansion agenda as economically destabilizing to America's rural communities. The proposals would unjustifiably allow the FCS to expand-far astray from its mission to serve farmers and ranchers-into providing government-subsidized commercial, home and consumer lending currently provided by tax-paying financial institutions.
"The subcommittee's legislation basically inserts the legal framework for the entire Horizons Project legislative package promoted by the Farm Credit System," said Mark Scanlan, director of ICBA's Office of Agriculture and Rural Policy. "While the suggestion has been made that the credit title language is narrowly focused on renewable energy, that is not the case." The provisions would allow many businesses to qualify for financing from the government-subsidized FSC purportedly on the basis of being tied to activities related to renewable energy.
"It would be impossible for the regulator to determine how many activities by a wide assortment of businesses are being carried out for renewable energy," Scanlan said. In addition, the provisions would allow FCS lenders to compete directly with a broad variety of small businesses that serve Main Street by offering 'business services,'" he said.
The House subcommittee's provisions would more than double the FCS's current tax-exempt lending for home loans in towns of 2,500 up to 6,000 and would include areas adjacent to larger cities or metropolitan areas, instead of targeting rural areas. "The FCS has provided no evidence that its lenders are meeting their current congressional mandate to serve the 16,000 rural 'places' of 2,500 population or less. Why reward them for failure to fulfill their mission?" Scanlan asked. Three other GSEs and thousands of private-sector lenders serve rural America. "There is no justifiable public policy case for a highly subsidized retail GSE to crowd out the private sector from the marketplace," Scanlan added.