WASHINGTON - House Banking Committee Chairman Jim Leach on Friday slammed a plan that would allow Farm Credit System members to lend nationwide.

The Iowa Republican said that a 12-page booklet released by the Farm Credit Administration last month explaining how its lenders can apply for a national charter was a "dubiously precedented" attempt to avoid public rulemaking.

The plan would allow the more than 180 nonbank lenders that are funded by the Farm Credit System to make loans anywhere in the country. Currently, they are restricted to specified regions.

In a letter to Michael M. Reyna, the Farm Credit Administration chairman, Rep. Leach said the plan was "a reflection of the continual self-generated urge of all government-sponsored enterprises to use their governmentally privileged positions to expand the breadth and scope of their activities in ways that distort the American market system."

Bank trade groups oppose national charters for Farm Credit lenders, claiming that as government-sponsored enterprises their debts carry an implicit government guarantee that gives them an unfair advantage. Additionally, they argue that giving these lenders the authority to operate nationwide will threaten safety and soundness because they will be able to make loans in agricultural markets where they have no underwriting experience.

John M. Blanchfield, director of the Center for Agricultural and Rural Banking at the American Bankers Association, called it "ridiculous" that the Farm Credit Administration should try to change the way its lenders operate without public comment. "This would be equivalent to national bank regulators approving interstate banking with a seven-page booklet on how to do it," he said.

A spokeswoman for the agency declined to comment Friday but said it will respond early this week.

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