Farm Credit System Expansion a Problem for All Bankers
Kim Greenland, Market President
Great Western Bank, Mount Ayr
The expansion of the Farm Credit System and the recommendations expressed in the Horizons report has long been an issue for ag bankers and one that we have continued to battle. However, it has become increasingly apparent that this issue continues to grow and that it has implications for all bankers throughout the industry. If FCS is successful in expanding into non-agricultural realms, more and more bankers will be affected. We will need to continue to be vigilant to prevent the expansion of the Farm Credit System.
The Horizons Report, released by FCS, expressed a desire to expand its lending to meet the financial needs in all of rural America, regardless of agricultural affiliation. This presents a threat to all bankers as fewer and fewer people living in rural areas are directly tied to agriculture. Urban and rural areas continue to blend together making the line between rural and non rural blur and creating an opening for FCS expansion.
Currently, FCS seeks to expand the definition of a rural area, based on population size. A community of up to 50,000 could be considered rural and FCS could then be allowed to make loans not only on farms, but for residential properties as well. FCS also seeks to expand its business lending power beyond those businesses that have obvious agricultural ties. These expansions go far beyond the original charter of the Farm Credit System and will compete with bankers in many areas across the country.
The expansions proposed by the Farm Credit System are not things that only FCS can do. In fact, these services are ones that have long been provided by banks. One of the central premises behind the push for FCS expansion is that financial needs in rural America are not being met. We know that bankers work hard to improve their communities and provide for the financial needs of the people. Banks are already meeting the needs of people that FCS intends to serve and have been meeting these needs for some time.
The Farm Credit System was created during a time when banks were unable to meet the lending needs of agricultural community. That time, however is now past and to seek the expansion of a program at the same time that the need for the program is diminishing seems unnecessary.
So what can bankers do? We’ve heard it before, but it bears repeating; contact your local legislators. The only way that we can help them to understand what the expansion of FCS means is to communicate to them that the financial needs of communities are already being met . . . by banks. If you have a relationship with one of our members of Congress, use it to start a conversation about the implications of FCS expansion. The IBA also offers bankers a way to send a letter to your representative through the Legislative Action Center available at www.iowabankers.com. We in Iowa are fortunate in that many of our legislative leaders will be important members of this discussion and they need to hear from bankers like you and me.
It is also important for bankers to educate themselves about the issue of FCS so that they can better justify the position of the banking industry. In better understanding the Farm Credit System, what it wants and why, we will be in a better position to fight its proposed expansion.
The debate over the expansion of the Farm Credit System will continue to be discussed as the 2007 Farm Bill is created. It is important to bankers that the expansions proposed by FCS remain out of this legislation. It will take all bankers, ag and non-ag alike, working together to accomplish this.
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