|Camden R. Fine, president and CEO of the Independent Community Bankers of America® (ICBA), today released this statement following the Farm Credit Administration’s (FCA’s) 2-1 vote to withdraw its proposed rule on rural community investments.
“ICBA applauds the FCA board for withdrawing this misguided proposed rule that would have provided Farm Credit System (FCS) lenders permanent and blanket regulatory authority to pursue all kinds of non-farm lending activities under the guise of investment programs. However, we remain concerned that the FCA board will continue to consider the same kinds of so-called ‘investments’ on a case-by-case basis.
“These pilot projects were nothing more than an attempt to allow FCS lenders to evade the constraints of the law by relabeling their illegal lending schemes as ‘investments.’ The FCA should take the additional step of sending a clear message to FCS lenders that it will not consider any ‘investment’ programs that go beyond the eligible loan purposes espoused in the Farm Credit Act that reflect the farm-related mission of this tax-advantaged government-sponsored enterprise. FCS lenders have no business pursuing lending for hotels, restaurants, manufacturing, apartment complexes, health facilities and other clearly non-farm loans. These types of activities were never authorized by the Farm Credit Act and displace taxpaying community banks from their vital role in our rural economies.
“CoBank’s recent $725 million loan to Verizon Communications to buy out Vodafone’s stake in Verizon Wireless is just the latest egregious example of inappropriate and unauthorized FCS lending for non-farm purposes.
“While today’s action withdrawing this proposed rule initiated more than five years ago in June 2008 is a good first step, it does not reimburse the community banking industry for the approximately $4 billion in loans diverted to FCS lenders as ‘investments’ over the past several years. FCA needs to now take the next step and instruct FCS lenders to keep the ‘Farm’ in the Farm Credit System and to refrain from non-farm based lending activities. If the FCA wants a larger role for FCS lenders in rural America, the agency should engage with the banking industry on how to achieve this in ways that do not disadvantage community banks and their important role supporting the economic growth and viability of rural America.”