A lengthy Washington Post article yesterday focuses on the extensive non-farm lending of the Farm Credit System and highlighted efforts by ABA and bankers on its Agricultural Credit Task Force to rein in the government-sponsored enterprise that has long exceeded its intended purpose.
The reporter features FCS excesses, such as its financing of “vacation homes, restaurants, car washes and even casinos,” and he mentions now-famous FCS deals for big companies like Verizon and Cracker Barrel. “Does anybody really think when Congress set up Farm Credit, it was to make loans to Cracker Barrel?” task force member Steve Daggett — president of Midwest Bank in Detroit Lakes, Minn. — told the newspaper.
Meanwhile, Leonard Wolfe — another ABA task force member and the chairman, president and CEO of United Bank & Trust of Marysville, Kan. — highlighted the disparity that results from the FCS’ preferential tax treatment. “We work through the first week of July just to pay our tax bill,” he said. “That is a huge advantage for them.” The disparity is heightened when one considers that community banks like Wolfe’s make farm loans as small as $20,000, whereas the FCS focuses on larger, seven-figure-plus credits, Wolfe added.
“Farm Credit needs to focus on farmers, and its regulators need to make sure Farm Credit is doing its job,” commented ABA VP Ed Elfmann. The article highlighted ABA’s grassroots and government relations strategy to refocus the FCS on farmers and limit its ability to leverage its favorable tax treatment to compete in non-agricultural lending.