NAWG and a dozen other groups representing farmers and ranchers wrote the head of the Commodity Futures Trading Commission (CFTC) this week, urging his agency to exempt Farm Credit System institutions from a mandatory swaps clearing requirement under consideration.
The groups told Chairman Gary Gensler they believe an exemption to the potential new requirement, provided for under a new financial regulatory reform law, can be given without compromising safety and soundness.
This is in part because the banks of the Farm Credit System are closely regulated by the Farm Credit Administration, which has full oversight authority over them and which routinely examines interest rate swap activities they conduct. While the banks all undertake interest rate swap activities required to support lending operations, none pose a systemic risk to the U.S. financial system.
The groups also told Gensler they are very concerned the additional costs of new requirements would be passed on to farmers and ranchers, particularly since Farm Credit is structured as a cooperative.
The new financial regulatory law permits exemptions from requirements like swaps clearing to be granted to certain financial institutions, including Farm Credit institutions.
Both House Agriculture Committee Chairman Collin Peterson (D-Minn.), who was intimately involved in the law’s creation, and Rep. Tim Holden (D-Pa.), chairman of the House Agriculture’s subcommittee with jurisdiction over Farm Credit, have indicated not all provisions of the new law are appropriate for the Farm Credit institutions.
To read the full letter sent this week, please visit www.wheatworld.org/othercorrespondence.