WASHINGTON (AP)--The House Banking Committee chairman urged the government June 23 not to issue national charters that would let regional farm-credit associations expand into each other's territory.
In a letter to the Farm Credit Administration, which oversees the institutions, Rep. Jim Leach, R-IA, said such expansion would allow the banks to lend outside of farming and to cater to "large agricultural conglomerates to the disadvantage of the family farmer."
The credit administration plans to take applications for national charters next month and issue them Jan. 1. The 179 regional associations lend to farmers and agricultural cooperatives.
The service expansion would "lower the cost of credit to the customer or at least keep it as reasonably priced as you can because of the improved efficiencies," said Christine Quinn, a spokeswoman for the Farm Credit Administration. She would not comment on Leach's letter.
The associations already compete with each other in 130 counties, and none has been hurt, she said.
Leach said national charters would allow the bigger associations to cherry-pick lucrative customers from smaller rivals. A large agricultural interest also could take control of individual associations "to serve its needs on a national basis, contrary to the intent of Congress when it established the system to serve small family farmers in a generally cooperative fashion," he said.
Traditional banks, which compete with the associations, also oppose the national charters.
"I know a lot of farmers in the short run would like to have a lot of lenders beating on each other .., but if the farm credit system gets into trouble that will hurt everybody, not just banks but farmers," John Blanchfield of the American Bankers Association said.
The associations currently have about 657,000 loans outstanding worth $70.3 billion.