FOR IMMEDIATE RELEASE
ICBA Opposes Language in FCA Proposal
Urban Non-Farm Lending Proposal Attempts to Profit from Misery
Washington, D.C. (October 25, 2005) - The Independent Community Bankers of America (ICBA) sent a strongly worded letter to the House and Senate appropriations committees opposing legislative language that would allow the Farm Credit Administration (FCA) to waive current eligibility restrictions on the Farm Credit System's (FCS) home mortgage lending by allowing FCS to lend in cities with populations of 50,000 or less whenever a disaster has been declared in the county. Current restrictions limit FCS home lending authorities to rural communities of 2,500 or less.
"This is a blatant power grab preying on the presumption that Congress will pass anything that is related to natural disasters and is an attempt to profit from the misfortune and misery of victims of natural disasters," said Camden R. Fine, ICBA president and CEO. "The proposal would allow FCS lenders to become general purpose urban lenders since home equity loans can be used for any purpose. Well over forty states have a disaster declaration affecting various counties. Why should a drought in Virginia allow FCS to make mortgage loans in high density suburban communities like McLean, Virginia?"
"Farmers fighting insect or plant disease problems have nothing to do with making urban or suburban housing loans. Conceivably, once a disaster has been declared, FCS could continue lending in these cities years after the disaster occurred. FCS lenders would not be limited to extending credit to disaster victims and would seek the most credit worthy borrowers - meaning no new loans would be made that wouldn't already be made by other lenders," Fine added.
In the letter, ICBA said that the proposal should be considered in the full light of day and go through the normal legislative process of hearings, not quietly added to an appropriations bill, noting that both the FCA and the FCS plan to release proposals early next year that would dramatically expand FCS lending authorities. "The proposal directly encroaches into the jurisdiction of the congressional agriculture and banking committees and has not been properly vetted before any of these committees. Adding this language only strengthens the argument that the FCA should be included under the umbrella GSE regulator now being considered by Congress," Fine warned.