Gardner requests review of CFPB’s impact on lending to agriculture sector

U.S. Sen. Cory Gardner (R-CO) sought information last week about whether the Consumer Financial Protection Bureau (CFPB) has inhibited lending from rural banks to the agriculture sector.

Gardner requested in a letter that CFPB Director Richard Cordray review CFPB rules and regulations to determine if they’ve affected the ability of rural financial institutions to lend to the agriculture sector, and during times of low commodity prices in particular.

“I am concerned existing rules and regulations are having the unintended consequence of inhibiting rural access to capital, and the continued downturn of commodity prices could make this worse,” Gardner wrote.

“With much of the agriculture industry in Colorado and throughout the nation facing a downturn, it is important that farmers and ranchers have access to financing to maintain operations through this difficult time,” he added.

Net farm incomes in Colorado have dropped to a projected $392 million in 2017 from more than $1.8 billion in 2011, Gardner said, citing the Colorado Business Economic Outlook.

The Federal Reserve Bank of Dallas has reported that small and mid-sized community banks accounted for 75 percent of agricultural loans in 2015 but have seen their market share overall drop from 64 percent of all baking assets in 1992 to 19 percent of all assets in 2015, Gardner noted.

The Fed reports that banks are exiting the market with no new entrants in rural areas, and also notes an increase in regulatory filings and compliance requirements.

“To sum up, we are seeing fewer small and medium community banks with less market share and greater regulatory compliance requirements trying to serve the vast majority of rural and agricultural financing needs,” Gardner said.

It’s critical that farmers and ranchers have access to financial resources and tools to weather financial peaks and valleys of the industry, Gardner wrote.

“I believe this is an opportunity for the CFPB to review their regulations and impacts they are having on rural America and I stand ready to work with you in the United States Senate to craft legislation that reflects the capital needs of rural and agricultural stakeholders,” he concluded.