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 as we indicated to you several days ago when we urged you to contact our two U.S. Senators.

There is a new, very serious threat that 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 Pennsylvania Congressman Tim 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 from farm and agricultural-related groups 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 initial proposal 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 your Congressional representative with the following message and your contact needs to occur now as the subcommittee and overall Agriculture Committee are currently considering this issue:

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

For your convenience, I have attached a sample letter that you may personalize and put on your institution’s letterhead as well as Talking Points against the Horizons Proposal. Your letter should be faxed to your Congressional Representative’s fax # in D.C.

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 or need anything for your contacts, please contact me or Dave Transue.

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