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Thune, Baldwin Urge Financial Regulators to Ensure the Agriculture Industry has Adequate Access to Capital

Washington — 

U.S. Sens. John Thune (R-S.D.) and Tammy Baldwin (D-Wis.) today urged financial regulators from the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the National Credit Union Administration to provide appropriate regulatory flexibility to community financial institutions around the country that work with farm clients. Many of these institutions have the necessary experience and expertise to understand and respond to shifts in the agriculture economy that would ensure producers have the access to capital they need, while also meeting a high regulatory standard.    

“We are concerned that policies like arbitrary concentration limits on agriculture portfolios can restrict a financial institution’s lending to struggling farmers and ranchers,” the senators wrote. “Such policies should not supplant the judgment of community financial institutions simply because their agriculture-related loans represent a significant source of their customer base. Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy, and we urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers.”

Full text of the letter below

The Honorable Jerome Powell                                              The Honorable Jelena McWilliams           

Chairman                                                                                   Chairman                                                 

Board of Governors of the Federal Reserve System          Federal Deposit Insurance Corporation          

20th Street and Constitution Avenue Northwest               550 17th Street Northwest                               

Washington, D.C. 20551                                                         Washington, D.C. 20429                      

The Honorable Joseph Otting                                               The Honorable Rodney Hood

Comptroller of the Currency                                                  Chairman                                         

Office of the Comptroller of the Currency                           National Credit Union Administration

400 7th Street Southwest                                                      1775 Duke Street                  

Washington, D.C. 20219                                                         Alexandria, VA 22314

Dear Chairman Powell, Chairman McWilliams, Comptroller Otting, and Chairman Hood:

We write to you regarding the state of our nation’s agriculture economy and the ability of community financial institutions to work with their farm clients to restructure loans and maintain their farming operations in these challenging times.

Many farmers and ranchers have experienced financial stress due to declining net farm income in recent years, trade uncertainty, and last year’s difficult growing season. We remain hopeful that the agriculture economy will begin to improve, particularly as new trade agreements are put in place. In the meantime, however, we believe financial regulators can help farmers and ranchers by ensuring community financial institutions have adequate regulatory flexibility to meet their needs.

We are concerned that policies like arbitrary concentration limits on agriculture portfolios can restrict a financial institution’s lending to struggling farmers and ranchers. Such policies should not supplant the judgment of community financial institutions simply because their agriculture-related loans represent a significant source of their customer base. Community financial institutions have a great deal of experience in agriculture lending during downturns in the farm economy, and we urge you to encourage your examiners to continue valuing their judgment when it comes to providing capital to producers.

Although cash flows may be tight, many producers have healthy equity positions due to land and other asset holdings. We believe community financial institutions, together with examiners and regulators, can exercise sound judgement until the farm economy rebounds, while also ensuring that the appropriate safety and soundness protections remain in place.

We look forward to working with you to ensure community financial institutions can continue to responsibly serve farm and ranch families facing financial pressures. Thank you for your attention to our concerns.

Sincerely,

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