Magazine article American Banker

Renewed Effort for Reintroduced Rural Credit Bill

Magazine article American Banker

Renewed Effort for Reintroduced Rural Credit Bill

Article excerpt

Largely because of cost concerns, a bill introduced by Nebraska Congressman Tom Osborne last year to give banks and thrifts tax breaks for lending in rural areas did not even receive a hearing.

But the Republican reintroduced the Rural Economic Invest Act last week, and community banks have made it one of their legislative priorities for 2005.

They argue that if it passes it will put them and Farm Credit System lenders on a level playing field. (Banks have long claimed that Farm Credit lenders use their status as tax-exempt government-sponsored enterprises to undercut banks on rates.)

More significantly, bankers say, the bill would encourage banks to make more loans in rural areas.

"It's a great piece of legislation for rural America," said Matt Williams, the president of the $80.1 million-asset Gothenburg State Bank and Trust Co. in Nebraska.

Rep. Osborne said in a statement provided to American Banker that his bill would help the banking industry "be more responsive to the credit needs of rural America. By giving banks opportunities to pass on lower interest rates, consumers in rural America will be able to enjoy additional credit options."

Industry representatives stopped short of predicting the bill's passage but have promised to step up their lobbying efforts for it.

Mark K. Scanlan, the Independent Community Bankers of America's director of agricultural finance, said last year's attempt by Rabobank to buy Omaha's Farm Credit Services of America may prove to have helped the Osborne bill.

The Dutch giant's deal for the Farm Credit System member fell through in October, but Mr. …

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