110th CONGRESS, LEGISLATIVE ISSUES A - Z

ISSUE: The Farm Credit System (FCS) is a network of cooperative financial institutions. This government sponsored enterprise (GSE) was created by Congress in 1916 to provide American agriculture with a reliable source of credit. The FCS routinely makes loans for:

• Agricultural processing and marketing activities,
• Rural housing,
• Farm-related businesses,
• Rural utilities, and
• Foreign and domestic companies involved in international agricultural trade.

Recently, the Farm Credit System completed a research and analysis initiative examining the emerging financial and economic needs of agriculture and rural America. In this initiative, called Horizons, the FCS identified certain aspects of the credit system in need of modernization. Some of the Horizons proposals were included in the House version of the 2007 Farm Bill (H.R. 2419), some of the most controversial included:

• Loosening criteria required for Agribusiness Loan Eligibility,
• For the purposes of Single-Family Housing Loans redefine a “rural area” as a town with up to 6,000 residents, an increase from 2,500,
• Broaden CoBank’s lending authorities

In July 2007, the Farm Credit provisions were stricken from the Farm Bill (H.R. 2419) on the House floor by an amendment offered by the House Financial Services Chairman Barney Frank and Ranking Member Spencer Bachus. The Farm Bill passed the House without the Farm Credit provisions.

BANKER POSITION: The banking trade groups oppose the Farm Credit System Horizons initiative, citing alleged expansionist powers and unfair competition to bankers. Bankers have argued that the FCS Horizons initiative is just like CURIA. This is an inaccurate comparison of two completely different industries and legislative proposals.

STATUS / OUTLOOK: Although the Horizons provisions were not included in the House Farm Bill, it remains possible that similar provisions may appear in the Senate Farm Bill in the fall 2007 and/or a conference report. It is also possible that the House Financial Services Committee will address the FCS Horizons initiative later this Congress.

CONTACT: Allen Chew, (202) 508-6796, achew@cuna.coop.

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