A highly curious statement was made at last week’s U.S. Senate hearing on the Farm Credit System. Leonard Wolfe, the CEO of a community bank in Kansas and one of the bank lobby’s chief spokesmen on farm lending issues, denied in testimony to Congress that the banking industry wants to kill the Farm Credit System.
“There’s a real misconception that banks want to eliminate the Farm Credit System,” Wolfe said. “That’s not correct, I’m not an advocate of that. We have to coexist; we have to find a way to do that.”
Why is that so curious? Because for years, both the American Bankers Association (ABA) and the Independent Community Bankers of America (ICBA) have been doing everything in their power to undercut Farm Credit in the halls of Congress. And they both have gone on record over the past year advocating that Farm Credit be abolished.
Last year, for instance, then ABA President & CEO Frank Keating did a recorded media interview in which he explicitly called for Farm Credit to be eliminated. “To have the Farm Credit System, an ossified anachronism, still in existence just makes no sense whatsoever,” Keating proclaimed. “It’s time we have the debate [in Congress], which we are, and the next step of course is not just to have the debate but actually get rid of the Farm Credit System.”
Mr. Wolfe, in his own testimony last week, called for an “autopsy” of Farm Credit. That sure sounded like he wanted to kill Farm Credit.
Meanwhile, over at the ICBA web site, a list of policy priorities for 2016 includes the following: “ICBA urges Congress to either abolish the FCS, or at a minimum restrict the FCS to its historical mission of serving the agricultural marketplace.”
The customer-owners of the Farm Credit System include over 525,000 farmers, ranchers, cooperatives and other rural borrowers across the country. They rely on Farm Credit every day for loans and other financial services that help their businesses succeed and their communities stay viable. As customer-owners of Farm Credit institutions, they have a direct say in how their institution accomplishes its mission to support rural communities and agriculture. And because they are owners, they know that Farm Credit will be there to meet their needs in good times and bad. How much comfort, really, can they take in Leonard Wolfe’s pronouncements about coexisting? Should they believe him, or the ABA and ICBA’s official public statements to the contrary?
As CEO of the Farm Credit Council, I would like to go on record once again that we believe rural America needs a robust community banking sector. Some 54 agricultural and rural groups believe that as well and just sent a letter to Congress expressing their desire to stand “firmly in support of the Farm Credit System” and adding their view that “the Farm Credit System and commercial banks play critical roles in ensuring that farmers, ranchers and other rural Americans have access to constructive, competitive credit on an ongoing basis.”
Farm prices are down and many U.S. producers are barely breaking even or worse. This is a time for community bankers to think more about helping their customers and less about attacking Farm Credit. Rural communities and agriculture benefit tremendously when Farm Credit institutions and commercial banks compete with each other, not only on pricing for loans but in customer service as well. Doing away with the Farm Credit System, which collectively has over $240 billion in loans outstanding and provides some 40 percent of all agricultural loans, would be an unmitigated disaster for rural America.
If Mr. Wolfe is sincere in his statements – if he and his fellow community banking executives truly do want to find a way to peacefully and productively coexist with Farm Credit – then we call on them to stop talking about “autopsy” and rein in the irresponsible actions and misleading rhetoric of their trade associations. Farm Credit stands ready to continue working with community banks for the benefit of rural America. But it will be much easier to do so when their lobbyists stop agitating for Farm Credit’s demise.
Todd Van Hoose is President & CEO of the Farm Credit Council, the trade association for the Farm Credit System in Washington, D.C.