Community Banker Alert

As you know, our industry has been faced with unfair competition from the credit union industry and we have been battling back against that. We also have fought hard against Wal-Mart and other commercial conglomerates from using an Industrial Loan Corporation charter loophole in the law from entering retail banking and that fight is ongoing.

There is a new threat and Congressman Tim Holden, your congressman and my congressman, is in a key position to help us stop that threat if we counter the tremendous pressure he is receiving from the farm groups and related agricultural constituency groups. That very real threat involves a proposal by the Farm Credit System (FCS) called Horizons which would allow the FCS, a government sponsored enterprise, to use its borrowing leverage with Wall Street and its GSE status and tax subsidies, to vastly expand non-farm lending. In essence, Horizons takes the “Farm out of the Farm Credit System.”

PACB has been lobbying hard against Horizons along with ICBA and ACB and I testified several weeks ago at Congressman Holden’s invitation before the House Subcommittee on Conservation, Credit, Energy, and Research which the Congressman chairs. Unfortunately, this subcommittee and the overall Agriculture Committee of the House has jurisdiction over this issue and there is tremendous pressure to enact Horizons and to put it into the Agricultural Reauthorization Bill that Congress must pass in 2007.

I do not want to understate how much of a threat Horizons is to community banking. Horizons would permit the FCS institutions to lend in cities up to 50,000 population for virtually all types of lending.

PACB needs you to contact Congressman Holden’s office with the following message and your contact needs to occur now as the Holden Subcommittee is scheduled to consider this issue on May 21st:

1. Please oppose the FCS Horizons expansion;
2. Please do not consider FCS Horizons in the Agricultural Reauthorization Bill.

You may contact Holden’s office by calling his Capitol office at (202)225-5546 or by faxing him a note at (202)226-0996. For your background, I have attached Talking Points against the Horizons Proposal. Feel free to fax this one pager to the Congressman’s office with your message of opposition.

Thanks so much for your immediate attention to this issue. We must stop Horizons or face significant new unfair competition from a government sponsored enterprise whose status and tax subsidies make competing against them very, very difficult, if not impossible. Should you have any questions, please contact me or Dave Transue.

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