The planned takeover of a major Midwestern farm loan cooperative by a Dutch banking giant could help undermine the national co-op loan system, members of a House subcommittee said at a hearing this week.
The proposed $600 million sale of Omaha-based Farm Credit Services of America to Rabobank "may cause a chain reaction leading to the downfall of the entire system," said Rep. Tim Holden, D-Pennsylvania. "We need to prevent institutions from leaving the system."
His comments were in line with those of officials of the farm credit network, who said the Farm Credit System's currently sound finances could be threatened if member organizations can drop out and take their assets with them.
However, a banking industry official, Jerold Harris, said borrowers have many other options for loans and there is no reason to force co-ops to remain in the system.