Sample Letter
Opposing the FCS Proposal - Horizons

I'm writing to urge you NOT to support the expansion of FCS lending through their so-called Horizons project. This is nothing more than a self-serving 'powers grab' by a government sponsored enterprise to step away from its mission of serving agriculture. Not satisfied with a 16% loan growth in 2006, a 14% asset growth, a 1.6% Return on Assets (compared to 1% for the banking industry) and annual net profits of over $2.4 billion, the FCS wants to now crowd out the commercial banking sector by cherry picking their Main Street business loans.

If FCS gets their way and legislation gets adopted in the farm bill many community banks will become a thing of the past. FCS is asking for commercial business lending; authority to make housing loans in cities of 50,000 population (instead of 2,500); and general consumer lending by the removal of stock purchase requirements. In addition, FCS will offer products and services that will compete with and displace many small businesses on Main Street. FCS's focus will shift away from their historical mission of serving farmers as their loan officers seek higher commissions from business loans.

These proposals will devastate community banks in our rural towns, decrease tax revenues and damage many businesses in the service sector resulting in many lost jobs. With these authorities the government-sponsored FCS could finance virtually any business on Main Street, as well as large retailers, manufacturers and publicly traded corporations. No new loans would be made that are not already being made by the private sector. Yet, FCS would be empowered to shift business, consumer and mortgage loans away from private sector banks to their own portfolios. Furthermore, because FCS's proposals do not target any underserved market category, they serve no public purpose.

Even the U.S. Treasury, under both republican and democratic administrations, has warned that the FCS, due to their GSE tax and funding advantages, is a heavily subsidized lender that could alter the competitive lending environment in rural America with very negative consequences for our rural communities. The FCS's mission is to serve farmers and ranchers, not to be general purpose lenders serving rural America. FCS pays almost no taxes and is completely exempt on real estate and home lending. FCS will utilize collateral from these types of activities to generate as much non-taxable income as possible from their new home and business lending authorities.

We have almost 7,000 community banks serving towns of less than 20,000 people. There is robust and ample credit at competitive prices available from the marketplace - something the FCS admitted during recent congressional testimony when they acknowledged that there are no credit gaps in rural America. FCS's Horizons proposal is a solution in search of a problem. It's just a powers grab with no economic justification. Driving rural banks out of business will harm rural communities and make fewer credit choices available to rural citizens.

FCS is just trying to use the farm bill as a door to unjustified and unwarranted powers to grow their already fast growing empire. According to their regulator, the Farm Credit Administration, the FCS is experiencing the fastest growth since 1981 -- under current authorities. Clearly there is no need for expanded powers. Please OPPOSE FCS expansion requests.