The Farm Credit System’s focus has been on cherry picking farm loans out of community bank portfolios while ignoring young, beginning and small farmers
Washington, DC (PRWEB) May 19, 2016
The Independent Community Bankers of America® (ICBA) today told Congress that the tax-advantaged Farm Credit System is undermining rural credit availability. Testifying before the Senate Agriculture Committee, ICBA community banker Gus Barker said the government-sponsored enterprise has strayed from its mission of serving farmers and ranchers by making nonfarm loans and weakening community banks.
“The Farm Credit System’s focus has been on cherry picking farm loans out of community bank portfolios while ignoring young, beginning and small farmers,” said Barker, president and CEO of the Community Bank of Oelwein, Iowa. “Further, more attention needs to be paid to the Farm Credit System’s nonfarm lending to some of America’s largest corporations, such as Verizon, AT&T and U.S. Cellular, and the Farm Credit Administration’s willingness to allow it. One hundred years of lavish subsidies for the Farm Credit System is enough.”
Congress provided the Farm Credit System (FCS) with tax and funding advantages in the early years of the previous century to provide farmers and ranchers access to long-term, fixed-rate credit at a time when such credit was limited, Barker noted. While community banks are providing their farm borrowers with ample credit at near historically low interest rates, the FCS has used its lavish tax subsidies to offer below-market rates to large farming operations, ignore small and beginning farmers, and weaken locally based community banks.
Barker noted that the FCS is trying to reposition itself as a general-purpose lender despite unsuccessfully lobbying Congress for expanded lending authority. The Farm Credit Administration has gone out of its way to ignore Farm Credit Act restrictions and allow FCS lenders to make nonfarm loans to businesses and infrastructure projects if labeled “investments.”
ICBA will continue working with the Senate and House agriculture committees to address FCS mission creep, the system’s lavish tax advantages, and its inappropriate nonfarm lending.
The Independent Community Bankers of America®, the nation’s voice for more than 6,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit http://www.icba.org.
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