Trade War: Wall Street Titans Ditch US Farmers

Hey Trump, maybe you should berate Wall Street for not helping farmers in their time of (trade war) need

Here's another thing for Trump to tweet about: amid his trade war hysterics, he's somehow overlooked bellyaching about large Wall Street banking concerns getting rid of their agricultural loan portfolios as  quickly as possible. Just as the government is extending more financial supports to farmers--probably WTO illegal--so it probably will have to provide more loans as well as private lenders cower in fear:

[A]fter years of falling farm income and an intensifying U.S.-China trade war - JPMorgan and other Wall Street banks are heading for the exits, according to a Reuters analysis of the farm-loan holdings they reported to the Federal Deposit Insurance Corporation (FDIC). The agricultural loan portfolios of the nation’s top 30 banks fell by $3.9 billion, to $18.3 billion, between their peak in December 2015 and March 2019, the analysis showed. That’s a 17.5% decline. 

Reuters identified the largest banks by their quarterly filings of loan performance metrics with the FDIC and grouped together banks owned by the same holding company. The banks were ranked by total assets in the first quarter of this year.

The retreat from agricultural lending by the nation’s biggest banks, which has not been previously reported, comes as shrinking cash flow is pushing some farmers to retire early and others to declare bankruptcy, according to farm economists, legal experts, and a review of hundreds of lawsuits filed in federal and state courts. 

Meanwhile, farm bankruptcy claims are going through the roof at the wrong time as commercial banks are increasingly unwilling to lend to this sector just as demand for loans to keep them afloat is increasing:

Chapter 12 federal court filings, a type of bankruptcy protection largely for small farmers, increased from 361 filings in 2014 to 498 in 2018, according to federal court records. “My phone is ringing constantly. It’s all farmers,” said Minneapolis-St. Paul area bankruptcy attorney Barbara May. “Their banks are calling in the loans and cutting them off.”

Surveys show demand for farm credit continues to grow, particularly among Midwest grain and soybean producers, said regulators at the Federal Reserve Banks of Chicago, St. Louis, Minneapolis and Kansas City. U.S. farmers rely on loans to buy or refinance land and to pay for operational expenses such as equipment, seeds and pesticides. Fewer loan options can threaten a farm’s survival, particularly in an era when farm incomes have been cut nearly in half since 2013.

The reason why commercial banks are ditching farmers en masse is easy to understand: they likely can't pay back their loans during these times of Trump-induced agricultural distress:

The noncurrent rates were far higher on the farm loans of some big Wall Street banks. Bank of America Corp’s noncurrent rate for farm loans at its FDIC-insured units has surged to 4.1% from 0.6% at the end of 2015. Meanwhile, the bank has cut the value of its farm-loan portfolio by about a quarter over the same period, from $3.32 billion to $2.47 billion, according to the most recent FDIC data.

Bank of America (BAC.N) declined to comment on the data or its lending decisions. For PNC Financial Services, the noncurrent rate was nearly 6% as of the end of March. It cut its farm-loan portfolio to $278.4 million, down from $317.3 million at the end of 2015. David Oppedahl, senior business economist for the Federal Reserve Bank of Chicago, said the banking community is increasingly aware of how many farmers are struggling. “They don’t want to be the ones caught holding bad loans,” he said.

As is usually the case, good job, Trumpie. It rightly serves those who voted mostly for Trump to experience the full brunt of trade wars which he promised.