ICBA - Publications - FCS Proposes Dramatic Expansion into Non-Farm Lending

FCS Proposes Dramatic Expansion into Non-Farm Lending

JULY 11, 2003


The Farm Credit Administration (FCA)'s recent public meeting on expanding the scope and eligibility of FCS lenders revealed a dramatic new expansionist agenda. Two FCS institutions have requested FCA to relax its regulations. In opening remarks, FCA chairman Michael Reyna stated, "While it is unclear whether it is a case of System institutions 'asking for forgiveness, rather than asking for permission,' today's hearing is also being held because of questions and concerns among our examiners who are increasingly finding violations of these same regulations."

FCS argued it should be allowed unrestricted lending for any non-agricultural purpose to anyone loosely defined as a farmer, and urged the elimination of regulatory distinctions between full-time and part-time farmers. FCS officials also argued that local boards of directors should determine the scope and eligibility of the association's activities guided by the annual business plan.

ICBA urged FCA to tighten regulations by requiring farmers to actually produce commodities, file a schedule F tax form, have major involvement in a farming operation, and earn significant income from the farm operation. We noted loans to bona fide farmers should be primarily agricultural loans and reminded the board that the current regulations are already generous in allowing part-time farmers the same credit access as full-time farmers if they try to earn their living from farming. ICBA has asked FCA to extend the comment period, now set to close July 31, to allow the public more time to weigh in.