FOR IMMEDIATE RELEASE
ICBA Urges Farm Credit Administration to Modify Proposed Exit Requirements
FCA Institutions Should be Free to Follow Market Oriented Pursuits
Washington, D.C. (December 14, 2005) - The Independent Community Bankers of America (ICBA) urged the Farm Credit Administration, the regulator of the Farm Credit System, to revamp its proposal outlining the requirements for a Farm Credit institution to change its charter and leave the Farm Credit System.
"Farm Credit institutions should be free to exit the Farm Credit System and follow more market oriented pursuits without major obstacles as Congress intended," said David E. Hayes, ICBA chairman and president and CEO of Security Bank, Dyersburg, Tenn. "This proposal makes it very difficult to follow that course of action even if an institution's board of directors has decided to pursue a new business model outside the Farm Credit System."
ICBA urged that the FCA proposal be modified to reduce the cost to convert to a more market-oriented focus. Further, ICBA called for expansion of the Farm Credit Administration's three-member board to include individuals with no ties to the system as a way to add transparency and accountability to FCA decision-making.
ICBA also called for the proposal to be modified in the following areas:
- Eliminate the requirement that the board of directors of a terminating institution must vote three times to leave the system,
- Reduce the paperwork related to an institution's restructuring once it has converted its charter,
- Reduce the requirements associated with directors' consultation with independent legal counsel, public or private expressions of their opinions about the termination, potentially posting sensitive termination-related documents on FCA's web site, requiring a 30 percent quorum to be physically present for a vote, and requiring terminating entities to obtain independent studies and analysis of the termination.
No federal banking agency has similar requirements for banks seeking to change their charters," concluded ICBA. ICBA intends to file a comment letter during the 60-day public comment period.