FOR IMMEDIATE RELEASE
ICBA Says FCA Termination Proposal Needs Major Revisions
Washington, D.C. (March 13, 2006)—The Independent Community Bankers of America (ICBA) today urged the Farm Credit Administration (FCA) to withdraw and revamp its proposed termination regulations that will preclude Farm Credit System (FCS) institutions from exiting the system.
"FCA's efforts to simply prohibit terminations of FCS institutions through a heavy-handed regulatory blockade of legal obstacles are completely contrary to the statute, legislative intent and good government," ICBA said in a comment letter.
"Instead of proposing streamlined regulations based on the statute's clear legal requirements, the FCA is simply catering to the system's long-term expansion plans as revealed by the system's Horizons Project. The FCA and the FCS desire to prevent FCS institutions from terminating their charters and then expand the lending powers of system institution charters in every conceivable area to become combination commercial banks and regional credit unions.
"The FCA and FCS strategy is based on crowding out private sector institutions by leveraging the tax and funding advantages of a GSE into markets already well served by the private sector. The result, if achieved, would ultimately be fewer financial institutions in rural America and fewer choices for rural citizens. This strategy cannot be in the best interests of rural America," observed ICBA.
ICBA finds several provisions of FCA's termination particularly objectionable:
- Requiring a terminating institution's board of directors to vote at three different times during the termination process;
- Posting sensitive termination-related documents on FCA's website;
- Requiring thirty percent of stockholders to be physically present during a termination vote.
"The proposal is obviously driven by the opposition of the system to the aborted attempt of Rabobank to buy FCSAmerica, a system institution, in 2004," said ICBA.
For the full text of the letter, please visit www.icba.org/newsroom.