Legislative Action News, April 3, 2012

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House Passes Budget – Includes Cuts to Agriculture
By Stephen Frerichs

Last week the House passed a budget by a party line vote (228 to 191 with 10 Republicans voting against the measure). From agriculture’s perspective, the budget is similar to last year’s House budget. It “suggests” $181 Billion in cuts to programs under the House Agriculture’s jurisdiction including cutting the crop insurance farmer premium subsidy (saving $15.5 Billion) along with significant cuts to commodity, conservation and nutrition programs.  All of these cuts are non-binding and non-starters as was demonstrated last year.

The new twist in this budget is reconciliation instructions to several authorizing committees including Agriculture.  In Agriculture’s case, the instruction is to cut $33.2 billion over 10 years and report back to the Budget Committee by April 27 regarding how those cuts will be made.  Normally reconciliation instructions result from a House and Senate conference, not from a House budget only.  It is clear the Senate will not take similar action.

Chairman Lucas (R-OK) has indicated that he will meet the budget instructions and then turn to writing the next farm bill. He views the two exercises as separate and distinct, recognizing that the budget will die in the Senate, while the farm bill has a chance of passing this year.

Senate Plans Committee Farm Bill by End of April
By Stephen Frerichs

Senate Agriculture Chairwoman Stabenow (D-MI) has indicated that she and Ranking Member Pat Roberts (R-KS) intend to hold a mark-up of the farm bill in the Senate Agriculture Committee by the end of April.  While most of the bill will be based on the work product from last year for the Super Committee, the commodity title in particular remains contentious.   Even though the Senate and House are on a two week break, staff is working on crafting the Committee bill and hopes to present it to members when they return.

CRP Deadline Approaching
By Stephen Frerichs

Landowners who want the opportunity to enroll in the Conservation Reserve Program (CRP) general sign-up 43 must do so by Friday, April 6, 2012. Landowners who want to offer eligible land for CRP’s competitive general sign-up may enroll at the Farm Service Agency (FSA) county office where their farm records are maintained.

House Agriculture Committee Holds Field Hearing in Arkansas
By Stephen Frerichs

Last week the House Agriculture Committee held a field hearing in Arkansas. You can find witness testimony at http://agriculture.house.gov/hearings/hearingDetails.aspx?NewsID=1541

Chairman Lucas made the following remarks to open the hearing:

“While each sector has unique concerns when it comes to farm policy, I’d like to share some of my general goals for the next Farm Bill. First and foremost, I want to give producers the tools to help you do what you do best, and that is to produce the safest, most abundant, most affordable food supply in the world. To do this we must develop a farm bill that works for all regions and all commodities.  I recognize that the challenges you face here in the Southeast are different than the conditions facing producers in Illinois or New York.  I also recognize that even within commodities, different programs work better for different regions. That’s why it is vitally important that the Commodity Title give producers options so that they can choose the program that works best for them.

I also am committed to providing a strong crop insurance program. Now, I know that crop insurance—while a valuable tool for many producers—doesn’t work as well for producers down here. That’s why offering an array of programs is important and why we must work with the Risk Management Agency to improve crop insurance products for rice, peanuts and other crops that do not have higher buy-up levels.  Lastly, we’ll work to ensure that producers can continue using conservation programs to protect our natural resources.”

Farmer Mac Outlines Procedures When Appraisers Were Engaged by Other Lending Institution
From Farmer Mac Almanac

A recent question to Farmer Mac from a Seller: Can I use an appraisal report that was prepared for another financial institution as long as it has a date of value not more than 365 days prior to Farmer Mac’s purchase of the loan?

The answer is that lenders may use an appraisal report that was prepared for a dif-ferent financial institution subject to certain conditions being met. Those condi-tions are outlined in Farmer Mac’s Collateral Valuation Supplement in Chapter CV101.2 E Appraisals from Third Parties. The requirements, recently edited for clarification, reflect regulations set by both FIRREA Title XI and the Farm Credit Administration. Download the Farmer Mac Almanac and read more on page 3.

Bank Examination Amendment Offered, Not Included in Senate JOBS Bill; OCC Chief Speaks
By Bill Garber

In a rare moment of comity, the Senate on Thursday passed the bipartisan  Jumpstart Our Business Startups Act (“JOBS Act”). The bill intends to make it easier for small businesses to expand their payrolls by exempting them from some of the new rules and regulations that they must comply with. Amendments were limited, but one was offered by Banking Committee member Jerry Moran (R-KS) and Joe Manchin (D-WV) included language from S. 2160, the Institutions Examination Fairness Reform Act they recently introduced, which is the companion bill to H.R. 3461 in the House. Both bills and the proposed amendment, would require more timely examination reports, more information about the facts the agency relied upon to make its exam decisions and more precise, consistent and understandable classification standards for commercial loans. However, the legislation would prohibit any reappraisal of a performing loan even if examiners identified safety and soundness concerns. While the amendment was not included in the final bill, The Appraisal Institute Washington Office of Government Affairs expects it will come up for discussion again, and therefore, continues to work  with House and Senate Committee staff on correcting the appraisal language.

In a related note, Acting Comptroller of the Currency John Walsh spoke at the American Bankers Association Washington Summit this week, and addressed the Examination Fairness Reform Act. in a statement that probably caused a lot of groans, Walsh said:

“There’s also a danger in trying to define supervisory practices in legislation. On the issue of collateral, for example, the bill includes language that is similar to what can be found in our 2009 policy statement on prudent CRE loan workouts: a loan should not be classified simply because the value of the collateral has deteriorated. However, for many CRE loans, the value of collateral is inextricably linked to collectability. This is often the case for construction and development loans where the primary source of repayment is the proceeds from the sale of the developed property. The loan is repaid when the property is sold, and the developer’s business plan assumes that properties can be sold at a certain value. If the value of the property falls too far, it may be impossible.  For the borrow to repay the loan in full.“

To read remarks by Acting Comptroller of the Currency John Walsh to the American Bankers Association, please click here:

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