During this week’s ABA Agricultural Bankers Conference in Milwaukee, a panel of ABA’s congressional relations team told attendees to “buckle up” for the next two years, discussing what the outcomes of the recent elections mean for banking issues, and how committee shifts could affect banking policy, including agricultural topics.
“I do think the election results were positive for banking policy in the sense that I don’t think we will see the same degree of incoming new challenges that we might have if these results had been different,” said Kirsten Sutton, ABA’s EVP of congressional relations and legislative affairs. “But we still have so much work to do to ensure that our priorities are being considered. This Congress is really thinking of a two-year window to try to push as many Republican priorities across the finish line as humanly possible.”
Though the GOP sweep of the House and Senate portends good things for bank-friendly policy, Sutton emphasized that doesn’t mean it’s time to neglect this minority.
“The minority still matters,” she said. “There’s a little bit more wiggle room in the Senate. There will be no wiggle room in the House, and our job is to make every banking priority as bipartisan as possible. So, for anyone who has Democratic members in their delegation. We need you. We need your participation. We’re not going to skip meeting with them because they’re not in control. Two years from now, there’s always the likelihood that there could be a flip [of congressional control].”
Sutton reminded the ag audience that ABA’s congressional engagement casts a wide net, touching so many different committees, such as Ways and Means, Tax, Agriculture, Small Business, Judiciary, and Energy and Commerce. “But obviously our issues are front and center with banking and financial services committees,” she said.
For Democrats in the Senate, with Banking Committee Chairman Sherrod Brown from Ohio losing his reelection bid, Sutton predicted that Elizabeth Warren of Massachusetts likely will be the next ranking member, noting that while Democratic firebrand won’t have the powers accorded a committee chair, Warren is adept at powerfully advocating for her policy positions in other effective ways. Sen. John Tester from Montana who also lost this election cycle, will be “a real loss” on the Banking and Agriculture committees because he has been an advocate for many ABA initiatives, including issues like the Access to Credit for our Rural Economy Act, or ACRE, Sutton said. For Republicans, Tim Scott from South Carolina, who currently is ranking member of the Banking Committee will become chairman, and “we’re going to hear him talking about the things that he cares about most, his opportunity agenda — housing, capital markets and capital formation.”
In the House, Democrat Maxine Waters from California will continue as ranking member of the Financial Services Committee. Where it gets “a little spicy” is the role for the gavel of the committee. There are four candidates who’ve expressed an interest: Andy Barr from Kentucky, French Hill from Arkansas, Bill Huizenga from Michigan, and Frank Lucas from Oklahoma, who has been active on agriculture issues.
Lame-duck session
There are a number of “must pass” agenda items for Congress before the end of the year, said Blake Earley, ABA’s SVP of congressional relations. The first to-do item Earley noted is the appropriation schedule. Congress is currently operating under a short-term continuing resolution that continued fiscal year 2024 funding that expires on Dec. 20. “Most likely, we’ll get another short-term CR at the eleventh hour before Dec. 20 that gets us into 2025, likely sometime in March,” Earley said.
The second item Earley mentioned was the National Defense Authorization Act, the annual defense policy bill that Congress has passed with bipartisan support for the past 60 plus years.
“When it comes to the NDAA, it often operates like a Christmas tree,” he explained. “A lot of members of Congress hang unrelated policy items onto the NDAA. So, we’re going to continue to remain vigilant to keep the bad policy off. We will oppose any new interest rate caps that are attempted to be added. We’re certainly doing everything we can to keep the Credit Card Competition Act off the NDAA as well.”
Third, disaster relief funding for the hurricanes recently in the Southeast is anticipated, as well as repairs for the Francis Scott Key Bridge in Baltimore after the container ship collision earlier this year. Earley said there also potentially could be some aid for farmers and ranchers in terms of direct assistance.
Banking, Ag Topics for the 119th Congress
For the coming Congress, ABA will be spending a lot of time on tax issues, the policy team said — some specific to banking and other industry-specific issues.
“First and foremost, having a competitive corporate tax rate will be very important to our members,” Sutton said. “We will be working to ensure extension of the 199A pass-through credits [from the Tax Cuts and Jobs Act]. Another priority is preventing a bank tax. Every time we discuss tax in Congress, somebody mentions a bank tax and this provision. When people are looking to offset spending, where do they look? Everyone thinks, ‘Well, banks always have money, so let’s look at banks.’ How about credit union taxation? We have opportunities to be in front of every member of Congress, whether they’re on a finance committee or not.”
A new five-year Farm Bill is still on the table, with the recent extension having expired. “We are a year and a half overdue on getting a farm bill done,” Ed Elfmann, ABA SVP of agricultural and rural banking, told the audience. “And we’re getting into a little bit of an economic down cycle in ag, which doesn’t time out well when you don’t have a Farm Bill moving forward.” Elfmann said there’s a 5-10% chance of getting any Farm Bill vote before the new Congress. Realistically, he said, there will be another extension to give the Senate, in particular, a time to work on a five-year bill.
“I don’t think the house will take quite as long as the Senate. They have their version, and I don’t think they’re going to change a whole lot — maybe some things around nutrition and the Thrifty Food Plan,” Elfmann explained. “But then you have to try to get this very tight majority in the House to vote for it, so they’re going to have to do some cutting, moving, maybe make it bipartisan. For the Senate version, everything we’ve heard is that it’s going to be very similar to House, with higher reference prices and guaranteed loan limit increases. That’s probably the biggest win for all of us. Our priority was increasing the guaranteed loan limits.”
As currently proposed, direct operating loans would increase from $400,000 to $750,000. Direct farm ownership loans would increase from $600,000 to $850,000. Guaranteed operating loans would increase from $2.2 million to $3 million. Guaranteed farm ownership loans would go from $2.2 million to $3.5 million. Microloans would double, from $50,000 to $100,000.
“Right now, it’s much easier to do a beginning farmer, rancher loan if you’re the son or daughter of a farmer. If you’re a niece or nephew, it gets a little more difficult. If you’re the kid who lives down the road who is a farmhand and wants to become a farmer, it’s even harder,” Elfmann explained. “We’re all working together to move things forward, to help farmers and ranchers. When we get a five-year bill, it’s going to have things that we as bankers have advocated for, for years, which is tremendous.”
Elfmann also explained that ACRE most likely will be included as part of other tax legislation, saying that getting it included as part of tax reform is “massive” and “the best vehicle” to move it forward. ACRE would make it easier for farmers, ranchers and rural families to access affordable real estate credit. It would give community banks the same tax-exempt status on certain earned interest that applies to farm credit institutions, allowing farm real estate borrowers and rural homeowners access to lower interest rates.
“Eight years ago, we were never thought we’d be where we are right now, actually talking about this being included in a major package,” he said, adding that the legislation has more support from Democrats than ever before. But with Sen. Tester’s loss in Montana, there may be need to find a new minority-party ACRE champion in the new Congress. “But the fight’s not over. We need to really push on our Ways and Means and Finance [Committee] members in the Senate to make sure that they are all aware that this is something that matters to us and needs to keep moving along, and we need to make sure that our friends in the agricultural community understand how it’s going to help them as producers.”
Other ABA areas of focus will be the Credit Card Competition Act and Section 1017 of the Dodd-Frank Act.
Sen. Dick Durbin, the Illinois Democrat who currently chairs the Judiciary Committee, is giving another push to CCCA before he loses his leadership role. The act would require that banks issuing credit cards have at least one card network available to merchants for routing transactions that is not Visa or Mastercard. Durbin and Republican Sen. Roger Marshall of Kansas “feel like they owe the big-buck retailers” with CCCA, said ABA’s Chris Fisher, VP of congressional relations, noting that Marshall unsuccessfully tried to attach the legislation to a Federal Aviation Administration authorization law this spring.
ABA’s will continue its work to oppose Section 1071 of the Dodd-Frank Act. The rule would require lenders to collect and report to the Consumer Financial Protection Bureau information about lending to women-owned, minority-owned and small businesses. Calling compliance “burdensome and costly,” Sutton said1071 puts small business privacy at risk and discourages bank lending to small businesses given the cost to collect this data. The CFPB “significantly misfired when they wrote this rule,” Sutton said, noting that the ABA has fallen short in recent legal battles against the legislation, but there are still other avenues available to combat it and the red wave sweeping into Congress in the new year may help.
