U.S. Sen. Cory Gardner (R-Colo.) has asked for a review of the increased rules and regulations that are putting additional pressure on the nation’s financially challenged agricultural sector.
“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, who sits on the Senate Budget Committee, wrote in an April 20 letter to the director of the Consumer Finance and Protection Bureau (CFPB). “With much of the agriculture industry in Colorado and throughout the nation facing a downtown, it is important that farmers and ranchers have access to financing to maintain operations through this difficult time.”
There appears to be a perfect financial storm of sorts swelling in rural America, according to a report from the Federal Reserve Bank of Dallas. Small and medium-sized community banks—which account for 75 percent of agricultural loans as of 2015—have seen their market share plunge from 64 percent of all banking assets in 1992 to 19 percent of all assets in 2015.
Additionally, “we are seeing a prolonged period of banks exiting the market with no new entrants in rural areas,” Gardner, also a member of the Senate Energy and Natural Resources Committee, wrote.
There’s been a “significant uptick of regulatory filings and additional regulatory compliance requirements” placed on these community banks as they try to serve most of the financing needs of the rural and agricultural sector, he wrote.
“It is critical that farmers and ranchers have the necessary financial tools and resources to weather an economic valley to get through this difficult time,” wrote Gardner, who said that he would work with CFPB “to craft legislation that reflects the capital needs of [these] stakeholders.”