Farm lenders resist proposal to lump them in with financial industry

[caption id="attachment_13808" align="alignright" width="144" caption="Terry Lindley"][/caption]

NORTH BAY - With the proposal of a new banking "super-regulator," it is not just community banks that are afraid of the unknown.

Every year in Washington, D.C, there is a national fly-in for representatives of the farm credit system to meet with congressmen and discuss industry news and issues. This year, the hot topics were the dairy industry, water issues and the bill by Massachusetts Democrat Rep. Barney Frank calling for a new banking super-regulator.

Mr. Frank's bill is in reaction to the financial crisis. Currently, banks are subject to regulations not only by the Federal Deposit Insurance Corp., but by a number of other regulators.

For the overall financial system, there is the Federal Reserve Board, the Office of Thrift Supervision, the Office of the Comptroller of the Currency, the National Credit Union Administration and the Farm Credit Association. And for banks chartered in California, there is the California Department of Financial Institutions. Depending on what kind of institution and where that institution is chartered, there can be any number of regulators overseeing a single institution.

However, in the farm credit arena, only the FCA is required to audit the institutions. There are other reviewers that are non-governmental. It is by choice of farm credit.

And industry experts would like it to stay that way.

Terry Lindley, senior vice president of marketing of American AgCredit in Santa Rosa, said he can see little positive about being under the umbrella of a new super-regulator.

"It is an unknown," he said. "I don't think even the government knows what that looks like."

He was one of the farm credit leaders representing the system in Washington last month. He went with 45 other people from 15 different associations from five states. They met with two senators and eight congressmen to discuss these issues.

"We are very optimistic that we will remain under the house agricultural committee," he said.

Part of the reason he believes this is because of the support of Rep. Collin Peterson, D-Minn., who is the chairman of the House Agriculture Committee.

"We don't need a new regulator," Mr. Lindley said. "We have a strong track record."

According to Mr. Lindley, the FCA was mentioned four times in the proposed bill.

Gary Findley is president of Gary Steven Findley & Associates, a law firm specializing in banking law with areas of expertise in regulatory relations and legal work.

Mr. Findley said that while there is a push to get consolidation in regulatory reform, there is also a turf war between agencies.

"I think we are going to get some consolidation," he said. "But the Fed will not be all things to all people."

He said that for uniformity, it makes some sense to have a super-regulator.

"When you are dealing with the Fed and the FDIC there is diversity of opinion. You will get one examiner looking at credit one way and another way."

But, he said, more authority isn't the best thing. "Absolute power corrupts absolutely," he said.

Meanwhile, American AgCredit announced to shareholders in April of this year that the board of directors signed a letter of intent in March to merge with Witchita Kan.-based Farm Credit of the Heartland.

The new association will be headquartered in Santa Rosa and called American AgCredit.

After approval from the FCA, which is expected, the vote goes to shareholders.

At the end of the first quarter, American AgCredit's total assets were $3.9 billion, up from $3.3 billion at the end of the same quarter of last year.