Congressman Eric Massa, as part of his Committee assignment to the House Agricultural Committee, attended an Agricultural hearing this week which was in full session to review and receive testimony from witnesses as to the impact of the recently released draft legislation called The Financial Stability Improvement Act (FSIA). This legislation would extend new regulations to many financial institutions. While the purposes of this bill are to protect American taxpayers from future events like the Wall Street crash of "too big to fail" institutions, there are questions on how this might affect important lines of credit imperative to farmers across the country.
This bill appears to potentially complicate and undermine the functions of the Farm Credit Administration (FCA). The current dairy crisis highlights the importance of the FCA and the serious risks this potential duplication of oversight poses to funds necessary for so many dairy farmers this year. The FCA understands agricultural cycles, and this bill would create a new overlapping agency with little or no institutional understanding of this industry. At its core, the prepared legislation elevates the Federal Reserve over the Commodity Futures Trading Commission and fundamentally shifts the responsibility from an agency that has been exceptionally successful, to the Federal Reserve.
The bill establishes a new Financial Services Oversight Council (FSOC) which will have exclusive authority to designate "financial companies" that could pose a threat to financial stability. It should be noted that no Farm Credit institution has failed during the current financial crisis.
"I have significant concerns about the potential negative impact of the proposed Financial Stability Improvement Act," stated Rep. Massa. "Increased insurance premiums, duplicate regulatory authority, and an overall negative impact are restricting the Farm Credit system. I intend to focus on this legislation in detail as we move forward."
Chairman Colin Peterson expressed his intention to keep the Agricultural Committee fully engaged in the review and amendment process of the Financial Stability Improvement Act.
The panel of this meeting included, The Honorable Gary Gensler, Chairman, Commodity Futures Trading Commission, Washington, D.C., The Honorable Elisse B. Walter, Commissioner, Securities and Exchange Commission, Washington, D.C., and The Honorable Leland A. Strom, Chairman and Chief Executive Officer, Farm Credit Administration, McLean, Virginia.