Rural Community Investments - Proposed Rule - Comments received after 8/15/08 James Bruns 111 West Lincoln Street Iroquois, IL 60945-1300
September 22, 2008
Gary K. Van Meter Deputy Director, Office of Regulatory Policy Farm Credit Administration 1501 Farm Credit Drive McLean, VA 22102-5090
Dear Mr. Van Meter:
Proposed Rule; Funding and Fiscal Affairs, Loan Policies and Operations, and Funding Operations; Mission-Related Investments, Rural Community Investments, Farm Credit Administration; 12 CFR Part 615, 73 Federal Register No. 116; pp 33931; June 16, 1008
I oppose the Farm Credit Administration's (FCA) proposal to allow Farm Credit System (FCS) lenders to invest up to 150 percent of their capital surplus on projects unrelated to agriculture.
At its creation, the FCS was granted certain advantages and was charged with serving a specific mission - helping local farmers and ranchers. The proposal allows FCS institutions to finance hospitals, healthcare facilities, transportation, infrastructure, hotels, office parks, manufacturing, facilities, or any other project the FCA deems appropriate. The rule goes against the purpose of the FCS.
I am concerned that this change will create safety and soundness problems. FCS could invest up to $36 billion of surplus in speculative investments about which the FCA has no experience in evaluating for safety and soundness.
When these speculative investments go sour, it would hurt the FCS's credit rating, resulting in higher interest rates and fees charged to farmers and ranchers (they very people that FDR wanted to help when the FCA was created in 1933).
Again, I respectfully request that the Farm Credit Administration withdraw this overreaching rule.