ABSTRACT
This chapter shows that the agricultural credit market is growing again but remains highly competitive, and competition is starting to bring some pressure to bear on the rules that govern farm lending. It discusses the implications may be greatest for commercial banks, which have the heaviest net of regulations, although recent changes in Farm Credit System rules will invite new debate on society’s contingent liabilities in a single-sector government-sponsored enterprise (GSE). A sweeping transformation of agricultural finance landscape is triggering new pressure to rewrite old rules governing agricultural lending. Consumer protection rules target disclosure and fairness. Disclosure rules require banks to inform consumers of credit terms accurately and uniformly. The chapter concludes that some rebalancing of costs and benefits in commercial bank regulation is likely, that the public will take a wary eye of GSE involvement in rural America, and that new ways may emerge to assess the risk of lending to agricultural production under contract to processors.
