The Farm Credit System's plan to expand its lending authority has been significantly scaled back by a House subcommittee — but bankers say it still goes too far.
The System's lenders had been seeking to make home loans in communities of up to 50,000 residents, but House Agriculture's credit subcommittee voted late Tuesday to limit Farm Credit's mortgage lending authority to towns with no more than 6,000 people. Currently they can only make home loans in towns with 2,500 or fewer people.
The subcommittee, which took up the issue as part of a broader farm bill, also gave approval for Farm Credit lenders to expand business lending beyond farms and ranches — but only to projects related to renewable energy. The System had been seeking approval to broaden commercial lending to any agriculture-related business.
Banking lobbyists viewed the subcommittee's decision to scale back the proposal as a loss and said they would try to stop any expansion when the farm bill moves to the full agriculture committee, likely next month.
"This was not a compromise to which we were a party," said Floyd Stoner, the lead lobbyist for the American Bankers Association. "We are still concerned about any increase" in the Farm Credit System's lending.
Ike Jones, a lobbyist with the Independent Community Bankers of America, said that if the provision were included in the final farm bill, it would be difficult for the Farm Credit System's regulator, the Farm Credit Administration, to ensure that business lending was tied to renewable energy.
"It's unenforceable," Mr. Jones said. "If I lend money to a trucking company and say, 'You can only use this truck to haul corn to an ethanol plant, but you can't use the truck for any other purpose' … how is that ever enforced?"
Martha Schober, a spokeswoman for the Farm Credit Administration, said that the agency has not taken a position on the System's bid to expand its lending authority, but would enforce any new law.
Mark Scanlan, the director of the ICBA's office of agriculture and rural policy, said all it would take to open the Farm Credit System's business-lending powers is one amendment striking the renewable-energy qualifier. "What if it goes to full committee and somebody moves to cross out that little tweak and then it's totally everything they asked for?" he said.
But Kenneth Auer, the president of the System's trade group, the Farm Credit Council, said that more than 500 organizations, including several farmers' groups, support the proposed additional lending power because increased competition would benefit farmers.
"It's not just an issue of credit availability," Mr. Auer said. "It's what are the rates and terms that people have to pay."
