WASHINGTON - The Farm Credit Administration plans to allow the government-sponsored lenders it regulates to expand geographically despite objections from House Banking Committee Chairman Jim Leach and the banking industry.
But Farm Credit Administration Chairman Michael M. Reyna bowed to one industry complaint and said the regulator, which oversees the roughly 200 lenders in the Farm Credit System, would publish its plans in the Federal Register and would seek public comment.
In a letter to Rep. Leach last Thursday the regulator said it will proceed with its controversial "national chartering" plan, which would let government-sponsored Farm Credit lenders make loans anywhere in the country beginning in January.
Farm Credit lenders are restricted from lending outside their geographic regions unless they get approval from the regulator. Bankers, who say the lenders use their tax-exempt status to undercut them on rates, fear they will face even stronger competition if national chartering goes through.
Rep. Leach and banks also contend that the Farm Credit Administration does not have the right to approve the plan without public comment and a formal board vote. The regulator says its charter gives it the power to let its regulated lenders expand their territories.
