WASHINGTON - The Farm Credit Administration board is set to vote Thursday to make it easier for farm credit associations to offer estate planning, insurance, and other financial services.
Leaders of the Farm Credit Council, which represents 232 local credit associations, say the change simply parallels the regulatory streamlining the Office of the Comptroller of the Currency is proposing for banks.
Banking groups see it in a more ominous light.
"Certain elements of the proposal may risk the safety and soundness of the FCS (Farm Credit System) institutions or allow them to compete unfairly against private corporations, actions not appropriate for institutions that constitute government-sponsored enterprises," wrote John Shivers, president of Southwest Bank, Fort Worth.
Mr. Shivers, a past president of the Independent Bankers Association, made his comment in a letter to the Farm Credit Administration.
"Congress intended for FCS institutions to specialize exclusively in lending for agricultural and rural housing purposes," wrote Paul Alan Smith, senior federal administrative counsel for the American Bankers Association.
"As such, FCS institutions do not have and should not have the institutional expertise needed to safely and effectively offer a host of 'related services,'" he added.
The bankers haven't been paying attention to the words of Congress, responded Stephen T. Phelps, senior vice president and general counsel of the Farm Credit Council.
"The authority to offer 'related services' comes in the Farm Credit Act," he said. "That hasn't changed. All they're changing is the regulatory burden."
What the Farm Credit Administration proposes to do is allow farm credit banks, production credit associations, federal land bank associations, agricultural credit associations, and federal land credit associations to offer any of 16 approved services without applying to the agency first.
Half these are insurance products explicitly approved by Congress in 1980 amendments to the Farm Credit Act; the other half were approved piecemeal for individual banks and associations by the Farm Credit Administration and include estate planning, record keeping, business consulting, tax preparation, appraisals, financial risk management, and foreign currency exchange.
"This is not going to be a big money-maker," said Mr. Phelps.