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Source: American Bankers Association (ABA) news release

The American Bankers Association testified today before the House Subcommittee on Livestock, Rural Development and Credit, offering the banking industry's perspective on credit conditions and credit availability in rural America.

Leonard Wolfe, president and CEO of United Bank and Trust in Marysville, Kan., testified on behalf of ABA. United Bank is a $570 million bank with more than $176 million in agricultural real estate and productions loans in the bank's portfolio. Wolfe is also chairman of the Kansas Bankers Association and vice chairman of ABA's Ag Credit Task Force.

In his testimony, Wolfe noted that more than 5,470 banks reported agricultural loans on their books at the end of 2013 with a total outstanding portfolio of more than $149 billion.

"More farmers and ranchers receive credit from the banking industry than from any other source," Wolfe said. "Agriculture is a vital industry to our country, and financing it is an essential business for many banks, mine included."

Wolfe explained the importance of the USDA's guaranteed farm loan program to make additional credit available to farmers and ranchers. He also thanked Congress and the agricultural committees for repealing borrower term limits.

"Term limits restricted farmer access to capital, and with the expansion of the farm economy over the past ten years, there are some farmers who are not able to obtain credit from banks like mine without a guaranty from USDA," Wolfe said. "We urge you to continue to support this very worthwhile program."

Wolfe also expressed concern about the direction of the Farm Credit System. He explained the growing size, complexity and tax advantages of the Farm Credit System - a government sponsored enterprise like Fannie Mae and Freddie Mac - and the risks it poses to American taxpayers.

"The most troublesome competitor I face is the taxpayer-backed and tax-advantaged federal Farm Credit System," Wolfe said. "Unlike the housing GSEs which are subject to reform efforts to lessen the taxpayer's exposure, the Farm Credit System seems to be increasing its dependence upon the U.S. Treasury."

Wolfe questioned the Farm Credit System's recent $750 million dollar loan to Verizon and $350 million loan to AT&T - neither providing explicit benefits to rural America.

Wolfe closed his testimony by expressing the banking industry's commitment to providing agricultural credit.

"When the agricultural economy collapsed in the middle 1980s, the banking industry worked closely with farmers and ranchers to restructure their businesses and to rebuild the agricultural economy. Since that time banks have provided the majority of agricultural credit to farmers and ranchers.

While other lenders, including the Farm Credit System, shrank their portfolios of agricultural loans or exited the business altogether, banks expanded agricultural lending. Bankers saw opportunity where others did not. Bankers still see great opportunities in agriculture."

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