FOR IMMEDIATE RELEASE
ICBA Opposes Farm Credit System Non-Farm Lending Plan
Asks Congress to Increase FCS Transparency and Maintain Focus on Farm Lending
Washington, D.C. (February 15, 2007)—The Independent Community Bankers of America (ICBA) expressed strong opposition to including the Farm Credit System's Horizons legislative proposals, which would expand FCS into non-farm lending, as part of the 2007 farm bill. Moreover, ICBA opposes additional FCS regulatory efforts to expand into non-farm lending.
"The Farm Credit System was established with special government sponsored enterprise (GSE) tax and funding advantages to serve agriculture, yet Horizons embraces a dramatic shift of FCS's focus towards non-farm lending and away from serving farmers and ranchers," said Mark Scanlan, ICBA director, agriculture and rural policy. "Unfortunately, the Horizons project seems intent on taking the 'Farm' out of the Farm Credit System."
In a letter to the House and Senate agriculture committees ICBA noted, "Adopting the Horizons legislative and regulatory agenda will cause dramatic and negative consequences in communities throughout rural America, including reducing the number of lending institutions serving rural America. How can it be in the best interest of rural America to reduce the number of competitors serving rural markets? "
Further, the Horizons project will enable FCS lenders to use their GSE status to transfer non-farm loans from tax-paying community banks to FCS lenders, causing a tax drain for state and local governments, and undermining the ability of rural communities to maintain their infrastructure and services. Horizons is unnecessary to FCS's future as FCS system assets grew last year at an annualized rate of 14.3 percent, and the system is expected to once again have net income well over $2 billion for 2006.
"With a sweeping regulatory agenda also pending, rather than consider expanding FCS powers in the farm bill, Congress should increase public transparency of Farm Credit Administration decision-making, halt the FCA's non-farm lending agenda and prohibit any illegal FCS lending and programs not explicitly authorized by statute," ICBA stated.
ICBA said thorough hearings should be conducted to explore fundamental questions such as whether there is a lack of credit in rural markets before seeking to amend the Farm Credit Act. ICBA pointed out there is no lack of credit in rural markets. Of the nation's 8,500 community banks, 44 percent are in towns of less than 5,000 people, ICBA wrote. Nearly 60 percent are in towns with less than 10,000 people. Community banks and other private-sector lenders are already serving the needs of consumers and communities.
Read the complete letter at www.icba.org.