As Congress considers restructuring the nation's government sponsored enterprises (GSE) -- such as Fannie Mae and Freddie Mac -- the American Bankers Association is calling on lawmakers to include the Farm Credit System (FCS) in reform legislation. The ABA has released a white paper titled, "The Farm Credit System Should be Included in GSE Regulatory Restructuring Legislation."



Current GSE reform bills would combine the Office of Federal Housing Enterprise Oversight with the Federal Housing Finance Board in order to oversee the three housing finance GSEs. However, the FCS -- a GSE-established in 1916 that now has more than $120 billion in assets -- has been ignored in the reform process.



"Failure to include FCS in regulatory reform legislation will expose the farmers and ranchers, who own it to unnecessary risk. One umbrella regulatory institution for all of the nation's GSEs would improve the System's safety and soundness and ensure that those who own it are being protected," said John Blanchfield, director of ABA's Center for Agricultural and Rural Development.



Organized as a cooperative, the FCS is owned by the farmers, ranchers, rural homeowners, and farmer-owned agricultural cooperatives who borrow from it. It is the only GSE that is a direct, retail lender.



The ABA paper explores eight reasons why FCS should be included in the reform process: improve safety and soundness, reduce regulatory capture, standardize the organization's structure, increase efficiency, increase regulatory competence, increase examiner competence, and provide better regulatory control. However, the most important reason is to protect the nation's farmers and ranchers who are the owners of the FCS.



For a full copy of the report, go to www.aba.com/aba/documents/press/FCSWhitePaper.pdf.



Source: Association Release