FOR IMMEDIATE RELEASE
ICBA, Financial Services Trade Groups Oppose Broad New Government Powers for Farm Credit Banks
Washington, D.C. (May 16, 2007)—The Independent Community Bankers of America (ICBA) along with five other banking and financial services trade groups called on Congress to oppose Farm Credit System attempts -- known as the Horizons Project -- to dramatically overhaul the Farm Credit Act to allow broad-based commercial business and home lending.
"The Farm Credit System should leverage its government-sponsored enterprise privileges in the service of its mission to farmers and ranchers, not in the service of its own ambitions," wrote ICBA along with American Bankers Association, America's Community Bankers, the Financial Services Roundtable, Independent Insurance Agents & Brokers of America, and the Mortgage Bankers Association in a letter to all 535 members of Congress. "The broad new powers being sought by the FCS are not about agricultural loans; they are about a GSE that wants to move away from agriculture into corporate and mortgage lending."
These new powers would undoubtedly harm this GSE's mission to lend to farmers and ranchers. Importantly, the Farm Credit Council proposals contain no provisions to further the FCS requirement to serve young, beginning, small, and minority farmers. Instead, the expansion agenda would displace private sector activity and destabilize rural economies, without adding new products, services, or lending, by transferring billions of dollars of financial services activities from the private sector to the FCS.
"There is simply no economic justification for the FCS proposals," said Camden Fine, ICBA president and CEO. "With 7,000 community banks serving towns of 20,000 people or less, there is an ample supply of competitively priced credit available. The system has acknowledged in congressional testimony that there are no credit gaps in rural America. FCS loan volume grew 16 percent last year, its assets grew 14 percent, and its return on assets was 1.6 percent compared with 1 percent for banks. Their regulator has stated the FCS is experiencing the fastest growth rate since 1981. The system's tremendous growth is occurring under current authority. Simply having the farm bill at hand is not a justifiable reason to expand FCS powers. Driving many community banks out of business will result in fewer credit options for rural consumers."
Read the full text of the letter, at www.icba.org.