Pub. 2 2014 Issue 4

www.uba.org 6 I n a recent radio interview in San Antonio, Texas, Michael Mauldin – regional president of First Financial Bank, Hereford, Texas – described how the Farm Credit System has used its government guarantee to finance loans outside of its mission. Case in point: A $725 million loan for Verizon to buy out a European telecom company. The incredulous response from the show’s host: “What does that have to do with farming and ranching?” Earlier, in Birmingham, Ala., Bob Jones – president and CEO of United Bank, At- more, AL., and a member of ABA’s Board of Directors – explained in another radio interview how the Farm Credit System has lost sight of its original mission. “In 2012, only 17 percent of the $247 billion in outstanding Farm Credit System loans went to small farmers,” he said. “It mor- phed, as many bureaucracies do, into a much more far-reaching enterprise.” Bankers across the country – even those in suburban areas – have compelling stories about how the tax-advantaged Farm Credit System unfairly tilts the competitive playing field while exposing American taxpayers and our nation’s economy to significant risks. ABA is helping you share these experiences. And with guidance from our special ABA Agricultural Credit Task Force, composed of bankers and state association execu- tives, we’re elevating and expanding our advocacy on this issue. In short, we're taking a more strategic and aggressive approach. That approach includes a new website – ReformFarmCredit.com – that will shine a spotlight on the Farm Credit System, the first and least-known of the government-sponsored enterprises. The website, set to go live in December, will help you tell your story to members of Congress and opinion leaders. It prom- ises to be a powerful tool in getting the word out about FCS abuses and on-going mission creep. Taken together, the system is a $266 billion entity. If the Farm Credit System were a bank, it would be the ninth largest in the United States. In fact, it’s bigger than 99.9 percent of all banks in the coun- try. These are facts policymakers need to know. They also need to know that as a GSE, the Farm Credit System represents a risk to taxpayers in the same way that Fannie Mae and Freddie Mac do. And, while it creates additional risk for taxpayers – it ironically benefits from significant tax breaks. In 2013, those tax breaks totaled $1.3 billion – that’s quite a competitive edge. Today, the Farm Credit System is making risky loans with government backing – formalized last year by the creation of a $10 billion line of credit with the U.S. Treasury. ABA and the state bankers associations are committed to exposing these truths. We need you to help, too. We’ll be asking you to “take a stand” and encourage your lawmakers to do the same. You need to let your lawmakers know that the FCS’ tax-free status and ever-expanding mission make it difficult to meet the needs of your customers and WASHINGTON UPDATE It’s Time to Reform the Farm Credit System By Frank Keating, President and CEO, American Bankers Association their constituents. No one can convey this message better than you. This is not a new battle. We’ve been fight- ing long and hard to put an end to the FCS inequities. We’re making progress, but we need to keep pushing Earlier this year, for example, ABA and Kansas banker Leonard Wolfe testified before a House subcommittee that has oversight over the Farm Credit System, bringing some much-warranted focus on its activities. Shortly after the June hearing, Rep. Marlin Stutzman (R-Ind.), a member of the House Financial Services Committee, penned an op-ed urging that “Farming should be at the center of the Farm Credit System … Unless we return the Farm Credit System to its original mission, taxpayers could be on the hook for a bailout in the near future and farm- ers’ access to credit could be reduced.” Now, with the rollout of ReformFarm- Credit.com – and your engagement and involvement – we will continue to up our game. You’ll also be able to personally lobby this issue – along with other key banking advocacy priorities – at ABA’s 2015 Government Relations Summit, March 23-25, in Washington, D.C. Registration for the Summit is free. Go to www.aba.com/Summit to learn more. With all of these resources in place, it’s time to continue to show lawmakers the real threat that the Farm Credit System poses to taxpayers and the economy, and the need for reform. n