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Last update: 10/21/14

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ICBA Comments on Farm Credit Administration Final Rule to Buy Loans from FDIC

Washington, D.C. (May 13, 2011)-Sal Marranca, chairman of the Independent Community Bankers of America (ICBA) and president and CEO of Cattaraugus County Bank, Little Valley, N.Y., released this statement following the Farm Credit Administration's (FCA) approval of a modified final rule to allow their regulated institutions to purchase loans and loan pools from the Federal Deposit Insurance Corporation (FDIC) when banks fail. 

"The FCA has just approved a modified final rule to allow their regulated institutions to purchase loans and loan pools from the FDIC when banks fail.  Although improved, in that the proposal now does not allow the purchase of ineligible non-agricultural loans, the rule's adoption is still troubling. 

"While we appreciate the FCA board's discussion that the rule would allow purchases from FDIC based on ‘need' we believe the final rule should stipulate that Farm Credit System (FCS) lenders are not involved at the outset of the bidding process, but only after banks have chosen not to bid on any remaining loans.  Only then could the final rule meet the stated goals of ‘filling a gap' and benefitting local economies and commercial banks.  If the rule allows the FCS, a government-sponsored enterprise with tax and funding advantages, to compete for loans of failed banks at the outset, FCS lenders would be utilizing their institutional advantages to underbid community banks, siphoning economic activity out of local communities and creating a destabilizing impact."

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