(DTN) -- The American Bankers Association is again taking off the gloves in its longstanding battle to curb Farm Credit System lending. In recent months, ABA leaders have stepped up radio and media interviews; they scored a rare House Agriculture Committee hearing that publicly flogged the system's lending practices; this week a Washington Post article rehashed those wounds.
The feud over Farm Credit's tax privileges and special access to Wall Street funding pre-dates the system's near meltdown and federal bailout in the 1980s credit crisis. It has simmered at ABA conventions for decades and behind closed doors in Washington D.C. Four years ago, the ABA formed a task force specifically dedicated to reform Farm Credit.
"We're all for competition. Banks like competition. They don't stray away from it. What they want is fair competition," said Ed Elfmann, vice president of ABA congressional relations. "We will compete with anyone as long as it is a fair playing field."
Country bank complaints have gained traction recently as bankers cite more instances of what they call "mission creep" -- charges that the system is increasingly serving city slickers and Fortune 500 companies instead of its traditional farm customers. They've developed a 24-page white paper detailing their gripes.
What rankles Kreg Denton, senior vice president of the First Community Bank of the Heartland, a six-branch $150 million bank serving western Kentucky and northwest Tennessee, is how Farm Credit appears to be straying from its original 100-year-old mission of serving farmers and ranchers.
Over the decades, Congress exempted the system from paying income tax on profits from farm mortgage lending and blessed its access to Wall Street funding with an implied government guarantee and a Government-Sponsored Entity (GSE) status. Those benefits were meant to help assure that farms, related ag businesses, utilities, co-ops and rural homeowners have access to credit in good times and bad. That tax exemption alone could save the system $600 million a year, some estimate.