Senators Want FCS of America Hearings

South Dakota Democratic senators Tom Daschle and Tim Johnson have introduced legislation to require public hearings regarding the process by which the Dutch Rabobank — a banking giant and international farm lender — would purchase Farm Credit Services of America (FCS of America).

Farmers and ranchers have expressed concerns about the sale of FCS of America — the government-guaranteed lender that provides rural lending services in South Dakota, Iowa, Nebraska, and Wyoming to more than 51,000 customers.

"The Farm Credit System has served our nation's rural communities exceedingly well for nearly 90 years," Daschle said on the Senate floor as he introduced the legislation, S. 2851. "Before any action is taken that may jeopardize that impressive record, we need to ensure that farmers, ranchers, and rural residents, as well as members of the Farm Credit Administration, have the time they need to analyze this profoundly important decision and reach the right conclusion."

The agreement is subject to approval by the Farm Credit Administration (FCA), the regulatory body that oversees the Farm Credit System. Current law would require a decision by the regulatory agency within 60 days of receiving the termination notice from FCS of America. That notice could come as early as this week. If FCA approves the sale, a final vote by the FCS of America shareholders could theoretically come before the end of the year, when Congress will likely be out of session.

But Daschle and Johnson, who have called for hearings by the FCA and congressional committees, say more time is needed to ensure that the FCA makes the right decision for farmers. Their legislation would call on the FCA to hold at least one public meeting or hearing in each of the four affected states.

The four field hearings would examine the proposal, which, approved, would mean producer-owners would be paid $600 million in patronage, and FCS of America would also have to pay the federal government an $800 million "exit fee," which is required should a member institution pull out of the System. The $800 million would go to the System's insurance fund. If the agreement is approved, FCS of America would no longer exist.

"This decision should be carefully analyzed, and it is clear that at the very least, more time is required to get all the facts and determine what would be in the best interests of the producer-owners of FCS of America, and in the best interests of the larger Farm Credit System," adds Johnson.

The House Agriculture Committee will hold a hearing in Washington on the Rabobank proposal on Wednesday, September 29.