FOR IMMEDIATE RELEASE
ICBA, Six Financial Trade Groups Oppose Expansion of Farm Credit System Lending Powers
Washington, D.C. (June 22, 2007)—The Independent Community Bankers of America (ICBA) and six other leading banking and financial services trade associations, in a letter to lawmakers, called on Congress to reject provisions of the 2007 Farm Bill that would greatly expand the powers of the Farm Credit System (FCS) and allow FCS lenders to engage in commercial lending, essentially creating a system of government-sponsored commercial banks.
“The FCS should leverage its government-granted privileges in the service of farmers and ranchers, not in the service of its own ambitions,” the trade groups wrote in their letter to Congress. “The broad new powers being sought by the FCS are not about making more agricultural loans or even new agricultural loans. Instead, these powers facilitate the System’s desire to move broadly into commercial lending, reduce the System’s focus on lending to farmers and ranchers, and expand its mortgage lending authority in direct competition with private mortgage lenders and government housing programs.”
“There is no demonstrated need for these amendments. The FCS’s loan volume increased 16 percent during the last half of 2006 and the FCS is growing at its fastest pace since 1981. FCS itself admitted during a Congressional hearing that there are no credit gaps in rural America,” the letter pointed out.
In addition to ICBA, the letter was signed by the American Bankers Association, the American Institute of Certified Public Accountants, the America's Community Bankers, the Financial Services Roundtable, the Independent Insurance Agents & Brokers of America and the Mortgage Bankers Association.
The letter cited a number of specific concerns with legislation that the House Agriculture Subcommittee on Conservation, Credit, Energy and Research recently included in the Credit Title of the Farm Bill. The FCS is a tax-advantaged GSE chartered by Congress to provide credit directly to farmers, ranchers and farmer-owned cooperatives. The draft measure would allow FCS banks to move far beyond their chartered purpose of focusing on lending to farmers and ranchers. The FCS’s effective tax-rate in 2006 was less than 3.5 percent.
Read the complete letter at www.icba.org.