OPINION: Questioning CFPB’s Impact on Agriculture Sector

U.S. Senator Cory Gardner (R-CO) this week sent a letter to Consumer Finance and Protection Bureau (CFPB) Director Cordray regarding the impact of the agency’s existing rules and regulations, “on the ability of rural financial institutions to lend to the agriculture sector, particularly in times of low commodity prices.”

The letter reads in full:

Dear Director Cordray:

I write to ask the Consumer Financial Protection Bureau to review existing rules and regulations within the CFPB to determine the impact they are having on the ability of rural financial institutions to lend to the agriculture sector, particularly in times of low commodity prices.

According to the Federal Reserve Bank of Dallas, small and medium size community banks account for 75% of agricultural loans as of 2015, yet they have seen their market share overall sharply decrease from 64% of all banking assets in 1992 to just 19% of all assets in 2015. Moreover, the Federal Reserve reports that we are seeing a prolonged period of banks exiting the market with no new entrants in rural areas.

Finally, the report notes the significant uptick of regulatory filings and additional regulatory 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.

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. 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. In Colorado alone, net farm incomes have dropped from over $1.8 billion in 2011 to a projected $392 million for 2017, according to the Colorado Business Economic Outlook.

As a lifelong resident of rural America, I have learned that our agricultural markets have peaks and valleys like any sector of the economy. 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.

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.

Thank you for your consideration and I look forward to your response.

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Cory Gardner

Cory Gardner is a member of the U.S. Senate serving Colorado. He sits on the Energy & Natural Resources Committee, the Foreign Relations Committee, the Commerce, Science, & Transportation Committee, and the Small Business & Entrepreneurship Committee, and is the Chairman of the Subcommittee on East Asia, the Pacific, and International Cybersecurity Policy.