Count traditional bankers among those whose frustrations with the Farm Credit System (FCS) are growing as quickly as the System itself.
This week Frank Keating, president and CEO of the American Bankers Association (ABA), sent letters to the chairmen and ranking members of the House and Senate Agriculture committees, outlining ongoing misconduct by the Farm Credit System and warning against its favorable treatment that, he said, is skewing market forces and harming the ability of local banks to strengthen their communities. Read the Senate letter here.
“These practices raise serious questions regarding the wisdom of providing continued federal tax subsidies to an entity that no longer serves a demonstrated market need, looks to major U.S. corporations as its customers, operates in the dark without transparency to its farmer-owners, and has quietly expanded its business model to compete directly with financial institutions that have difficulty serving their customers in the face of such government-subsidized competition,” he wrote.
In addition to detailing the mission creep that has plagued the System since its inception in 1916 – a period when credit was not readily available – Keating called for an oversight hearing to examine the FCS.
“As the committee of oversight for FCS, it is critical that all aspects of the FCS, especially their financial practices in areas outside of FCS’s mission, be closely scrutinized and thoroughly examined,” he wrote.
Congress’s last hearing on the FCS was held more than a decade ago.