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ICBA on Rejection of Rabobank Bid

"Not Surprising, but Shows the Farm Credit System's True Colors"

Washington, D.C. (Oct. 21, 2004) - Responding to today's announcement that the FCSAmerica (FCSA) board decided to terminate the acquisition agreement between FCSA and Rabobank, the Independent Community Bankers of America (ICBA) issued the following statement from ICBA President & CEO Camden R. Fine:

"The FCSAmerica announcement that it would terminate its merger agreement with Rabobank is not necessarily surprising given the activities of Farm Credit System (FCS) representatives in recent weeks to derail the bid. Unmistakably, it also reveals the true colors of the Farm Credit System's lobbying position. The FCS has been quite eager in recent years to push for bold new lending powers and customer eligibility provisions as it uses its special GSE privileges to compete against the private sector. FCS cherry picks the best farm loans from community banks' loan portfolios and weakens the ability of the banking industry to serve the agricultural marketplace.

"FCS representatives like to say that when they are granted new lending powers it promotes greater competition. But when they perceive that greater competition comes at their expense, they circle the wagons and ask Congress to protect their market share.

"Neither FCS officials, nor their regulator, have shown any justification or rationale for any new lending powers, which the FCS announced it would pursue in the 109th Congress. Rather, the marketplace is saying that the system should be opened up and made more efficient by allowing community banks to access the system's funding source, and that the system and its regulator should seek ways to work with commercial banks, not against them, to better serve rural America."