U.S. Sens. John Thune (R-S.D.) and Tammy Baldwin (D-Wis.) today urged financial regulators from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration to provide appropriate regulatory flexibility to community financial institutions around the country that work with farm clients. Many of these institutions have the necessary experience and expertise to understand and respond to shifts in the agriculture economy that would ensure producers have the access to capital they need, while also meeting a high regulatory standard.
“We are concerned that policies like arbitrary concentration limits on agriculture portfolios can restrict a financial institution’s lending to struggling farmers and ranchers,” the senators wrote. “Such policies should not supplant the judgment of community financial institutions simply because their agriculture-related loans represent a significant source of their customer base. Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy, and we urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers.”
Full text of the letter below
The Honorable Jerome Powell The Honorable Jelena McWilliams
Chairman Chairman
Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation
20th Street and Constitution Avenue Northwest 550 17th Street Northwest
Washington, D.C. 20551 Washington, D.C. 20429
The Honorable Joseph Otting The Honorable Rodney Hood
Comptroller of the Currency Chairman
Office of the Comptroller of the Currency National Credit Union Administration
400 7th Street Southwest 1775 Duke Street
Washington, D.C. 20219 Alexandria, VA 22314
Dear Chairman Powell, Chairman McWilliams, Comptroller Otting, and Chairman Hood:
We write to you regarding the state of our nation’s agriculture economy and the ability of community financial institutions to work with their farm clients to restructure loans and maintain their farming operations in these challenging times.
Many farmers and ranchers have experienced financial stress due to declining net farm income in recent years, trade uncertainty, and last year’s difficult growing season. We remain hopeful that the agriculture economy will begin to improve, particularly as new trade agreements are put in place. In the meantime, however, we believe financial regulators can help farmers and ranchers by ensuring community financial institutions have adequate regulatory flexibility to meet their needs.
We are concerned that policies like arbitrary concentration limits on agriculture portfolios can restrict a financial institution’s lending to struggling farmers and ranchers. Such policies should not supplant the judgment of community financial institutions simply because their agriculture-related loans represent a significant source of their customer base. Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy, and we urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers.
Although cash flows may be tight, many producers have healthy equity positions due to land and other asset holdings. We believe community financial institutions, together with examiners and regulators, can exercise sound judgement until the farm economy rebounds, while also ensuring that the appropriate safety and soundness protections remain in place.
We look forward to working with you to ensure community financial institutions can continue to responsibly serve farm and ranch families facing financial pressures. Thank you for your attention to our concerns.
Sincerely,