WASHINGTON - The Farm Credit System didn't get exactly what it wanted Tuesday on Capitol Hill when the Senate Agriculture Committee put off a proposal to expand the list of uses for farm credit funds.
But it may try again today at Farm Credit Administration headquarters in McLean, Va., when the agency's board considers a proposed rule on who is eligible for loans from the farmer-owned banks and associations it regulates.
Farm Credit System banks and associations, which can now lend only to farmers, direct providers of on-farm services, rural homeowners, and some rural utilities, had pushed Congress for new powers.
Among the desired activities: the power to finance farm-related manufacturing and the rural telecommunications providers, as well as to buy whole agricultural loans from banks.
"If you look at the trends, their market share has declined," said John Blanchfield, associate director of agricultural banking for the American Bankers Association. "So they're coming out with some really strange, esoteric things."
The ABA and the Independent Bankers Association of America, meanwhile, have proposed letting rural banks join the Farm Credit System and thereby get access to capital markets via the bonds issued by farm credit banks.
During deliberations Tuesday on the 1995 farm bill, the Senate Agriculture Committee did not go for either proposal. It did, however, vote to include in the legislation the provisions of a Farm Credit System regulatory relief bill introduced last month by Sen. Larry Craig, R-Idaho.
Banking groups, which opposed Farm Credit System attempts to extend its lending authority, did not fight the regulatory relief proposal. It will extend the maximum period between safety-and-soundness examinations of farm credit institutions from 12 to 18 months, give the Farm Credit System Insurance Corp. more leeway in setting insurance premiums and granting rebates, and cut back on system paperwork.
The proposal to be considered at today's meeting of the Farm Credit Administration board will deal with "eligibility and scope of financing," according to the meeting agenda.
But that's all the Farm Credit Administration is saying about it.
A spokesman for the Farm Credit Council, the trade association for the two banks for cooperatives, six regional farm credit banks, and 232 local credit associations that make up the Farm Credit System, said his group had not seen a draft copy of the proposed regulation and did not know what would be in it.
IBAA agriculture lobbyist Mark Scanlan also had no details on the agency's proposal. But, he said, "obviously we're concerned they're trying to expand both their market share and their borrower universe through regulation."
On June 30, the Farm Credit Administration published in the Federal Register a final regulation making it easier for Farm Credit System institutions to offer services such as insurance, tax preparation, and bookkeeping in addition to making loans.
Banking groups assailed the regulation as unfair expansion of the powers of a government-sponsored competitor. Farm Credit System leaders countered that they were simply getting the same sort of regulatory relief as Comptroller of the Currency Eugene A. Ludwig has granted national banks.
