ABA Challenges Farm Credit System

The American Bankers Association has called for congressional hearings into the Farm Credit System. ABA President Frank Keating, a former governor of Oklahoma, told Brownfield Ag News this month that the system was a product of the Great Depression, and its loaning practices were no longer specific to agriculture.

“Farm Credit, now, if it were a private bank, would be the ninth largest bank in the United States,” Keating said. “So, we think there ought to be hearings on the Hill. Why do we have a Farm Credit System? A creature of the Depression in 2015? At the very least, they ought to pay federal income taxes.”

The system does pay federal taxes, according to Ken Auer, President of the Farm Credit Counsel. FCS has special tax provisions at the federal level.

The system is exempt from taxes in most states because of its limited work in support of agriculture in rural communities.

In response to Keating’s criticism that lending has bled beyond the boundaries of agriculture, Auer told Brownfield Ag News that when the system’s loans do not directly support farms or ranches, they support strengthening farming communities. Auer calls the American Bankers Association criticism “trade association politics.”

The Farm Credit System is comprised of 80 cooperatively owned financial institutions that pay earnings to farmers. The system does not draw from federal funds or taxpayers. Its loans do not represent a higher risk of default than loans from a commercial bank. S