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ICBA Asks Congress to Block USDA Fee Proposal on Farm Loan Programs

Investment in Rural Areas Would Fall under USDA Proposal

Washington, D.C. (June 13, 2006)—The Independent Community Bankers of America (ICBA) asked Congress to block the U.S. Department of Agriculture's proposal to impose new and higher user fees on its guaranteed farm loan programs.

"Those bearing the burden of the new and higher fees would be those least able to pay the added costs since by definition these producers are not able to get credit elsewhere," said Pete Haddeland, vice chairman of ICBA's Agriculture-Rural America Committee and president and CEO of the First National Bank, Mahnomen, Minn. in written testimony to the Senate Agriculture Committee. "Higher fees may also result in fewer lenders being involved in these loan programs."

In its testimony, ICBA noted that the proposed user fees penalize a cost-efficient government program where only a small amount of money can leverage billions of dollars of private sector loans in rural communities. If Congress fails to adopt the legislation to prevent the new and higher user fees they would take effect October 1.

USDA issued a proposed regulation on May 15 with public comments due July 14. The proposal raises user fees on guaranteed loans by at least 50 basis points to 1.5% for guaranteed real estate and production loans and implements a new annual 75 basis point fee for lines of credit.

USDA could increase these fees in the future by publishing a notice in the Federal Register. The House has passed its version of the fiscal year 2007 Agriculture Appropriations legislation (HR 5384) which includes a measure to block USDA's user fee proposal.

View ICBA's complete testimony and link to the USDA proposal at www.icba.org.