WASHINGTON - Leaders of a House agriculture subcommittee have told bank groups and the Farm Credit Council to resolve their differences before Congress comes back into session Sept. 5 - or else.

But with half of Washington on vacation, even arranging a meeting between the opposing sides in the debate over Farm Credit System lending has so far proved impossible.

That may increase the chances that Rep. Wayne Allard, R-Colo., chairman of the House Agriculture subcommittee that deals with farm credit, and Sen. Larry E. Craig, R-Idaho, Mr. Allard's Senate counterpart, will come up with legislation not to rural bankers' liking.

Both Rep. Allard and Sen. Craig have in the past voiced support for efforts to "modernize" the $65 billion-asset Farm Credit System, which has seen its share of farm lending drop from 33.4% in 1984 to a projected 24.2% this year, while commercial banks' share has jumped from 24.4% to 40.7%.

To the Farm Credit Council, which lobbies on behalf of the farm credit banks, banks for cooperatives, and farmer-owned credit associations that make up the Farm Credit System, "modernization" means new lending powers for system institutions.

At the top of the council's wish list are giving the system authority to buy whole loans from banks and letting it finance rural cable and telephone systems, value-added agricultural manufacturing, and nonfeed, nonfood uses of agricultural products.

The American Bankers Association and the Independent Bankers Association have opposed these proposals, and pushed instead for letting rural banks join the Farm Credit System and thereby gain access to capital markets via the bonds sold by farm credit banks. The Farm Credit Council, for its part, has called this a blueprint for a bank takeover of the Farm Credit System.

Late in July, Rep. Allard and his subcommittee's ranking Democrat, Tim Johnson of South Dakota, called in lobbyists from the ABA, IBAA, and Farm Credit Council and told them that if they failed to settle their differences during Congress' August recess, the subcommittee would go ahead and write its own farm credit legislation, which might be to neither side's liking.

Leaders of all three groups agreed that talking things over was a good idea, but so far they have been unable to find a time to do so, said lobbyists Mark Scanlan of the IBAA and Jeff Shipp of the Farm Credit Council.

Mr. Shipp, the council's vice president for government affairs, said the feedback he's been getting from House Agriculture Committee staffers indicates that the Farm Credit Council can hope to get at least some of its wishes answered by the committee.

In the Senate, Sen. Craig has already promised to push the Farm Credit Council's whole loan purchasing and rural information highway lending proposals as amendments to the 1995 farm bill.

As for the bankers' plan to participate in the Farm Credit System, Mr. Shipp said he had detected no enthusiasm for it in Congress.

"I'm not sure anybody has any interest in seeing the healthy competition between banks and Farm Credit System institutions be harmed," he said.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.