News
Banking group criticizes Farm Credit System
The American Bankers Association (ABA) says there should be congressional hearings into the Farm Credit System (FCS). And, ABA President Frank Keating questions the need for a Farm Credit System. The former Governor of Oklahoma tells Brownfield Ag News, “Farm Credit, now, if it were a private bank would be the 9th largest bank in the United States. They’re into lending that has nothing to do with agriculture. So, we think there ought to be hearings on the Hill. Why do we have a Farm Credit System? A creature of the Depression in 2015? At the VERY least, they ought to pay federal income taxes.”
Ken Auer, President of the Farm Credit Counsel, says the FCS does pay federal taxes, but has special tax provisions and does not pay many state taxes, “The reason for that is the limited mission and the specific mission that the system has to serve agriculture and support agriculture in rural communities.”
Auer tells Brownfield Ag News that FCS loans that reach beyond farmers and ranchers are for supporting rural communities. He calls the American Bankers Association criticism “trade association politics” and says the irony is, commercial banks and the FCS work together every day. Auer says, “Even when we have a president of a bank in Washington complaining about the Farm Credit System his staff are at home referring a loan to a Farm Credit entity because that institution did not want to lend to that individual and, therefore, they’re passing the loan off to the system.”
Auer says there is NO federal or taxpayer money involved in the Farm Credit System, and an FCS loan has no more risk to taxpayers than a loan from a commercial bank. Auer says the Farm Credit System is made up of 80 financial institutions, cooperatively-owned, that pay earnings back to farmers.
AUDIO: Interview with Frank Keating (9:30 min.):
AUDIO: Interview with Ken Auer (13:00 min.):
With all do respect Mr. Auer the Farm Credit System pays 4.5% in federal taxes while
the average S-Corp community bank pays 39.6%. Sound fair to anyone?