Lawmakers lack the authority to prevent Rabobank Group of the Netherlands from buying an Omaha lender in the Farm Credit System, a Congressional Research Service report says.
The six-page report by Congress' public-policy research arm found that statutes and regulations in place allow Farm Credit Services of America to leave the government-sponsored Farm Credit System and sell to a private-sector company.
The Aug. 23 report points out, however, that the Farm Credit Administration could deny Rabobank's application if it felt a sale of the Omaha lender would interfere with the system's mission of providing farmers with access to credit.
Rabobank, which has assets of $500 billion, is one of the world's 25 largest banks. It announced its $600 million cash deal for the $7.8 billion-asset Farm Credit Services of America in late July.
Other Farm Credit lenders fiercely oppose the idea of a member of the system selling to a commercial bank. One of them, the $2.6 billion-asset Agstar Financial Services of Mankato, Minn., has made a counteroffer of $650 million for Farm Credit Services.
South Dakota Sens. Thomas Daschle and Tim Johnson, both Democrats, have called for congressional hearings on the Rabobank deal and asked the system's regulator, the Farm Credit Administration, to hold public hearings in the four states where Farm Credit Services does business - Nebraska, Iowa, South Dakota, and Wyoming - to gauge the impact a sale would have on borrowers. They also want hearings before the Senate Agricultural and Banking committees.
"We still do think there is ample justification for congressional oversight over this issue," a spokesman for Sen. Daschle said.
The Congressional Research Service report also says that if the sale is completed the Farm Credit Administration would need to issue new charters to fill in the territory. Otherwise farmers there would have limited or no access to a Farm Credit System lender.
