FCA Rejects National Charters

The Farm Credit Administration board has rejected a proposal that would have allowed the Farm Credit System to establish national charters, allowing system banks to extend into regions beyond traditional boundaries. Both the American Bankers Association and the Independent Community Bankers of America applauded the decision.

John Blanchfield, director, ABA Center for Agricultural and Rural Banking, said ABA adamantly opposed the national charters proposal "because it posed significant safety and soundness risks and raised a number of public policy concerns ... the proposal would have abandoned core principles of the Farm Credit System by eliminating clearly defined territories and the principle of local ownership and control. It also would have exposed American taxpayers to activities of a tax-advantaged government sponsored enterprise that has a history of risky lending and weak regulatory oversight."

Blanchfield added, "By instead directing the FCA to better define the public policy mission of the Farm Credit System, the board has taken a critical step to ensuring the future health and safety of the System. Such a reexamination of the FCS' role in serving the needs of rural America is sorely needed, and ABA strongly supports it."

Dale Leighty, chairman of ICBA's Agriculture-Rural America Committee and president of First National Bank of Las Animas, CO, said the decision "is in the best interest of rural agricultural credit markets, because it lessens the th4reat of large lenders cherry pciking the best loans of small lenders while ignoring struggling famrily farmers and ranchers."

ICBA has maintained that removing geographic restrictions would lead to unfair predatory lending practices by the larger FCS institutions and threaten local lending to farmers, ranchers and rural communities.