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Members, lenders respond to FRAME Act proposal for tax‑deferred farmer savings accounts
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Summary
Representative Crawford described the FRAME Act, a proposal to create tax‑deferred savings accounts for farmers to build reserves for downturns; lenders welcomed the idea but asked for clarity on whether accounts would be on banks' balance sheets and usable as collateral.
Representative Crawford introduced the concept behind the Farm Risk Abatement Mitigation Election (FRAME) Act, describing it as a tax‑deferred savings account that would allow farmers to deposit funds tax‑free during profitable years and withdraw them tax‑free during hard years.
Clint Hood, senior vice president at Synovus Bank, welcomed the premise but raised operational questions: would FRAME accounts be considered on‑balance‑sheet for lenders, and would saved funds be subject to seizure? Hood said, “If it's an on balance sheet, savings account, then I say, heck, yeah. We'll just put that as a it's not that dissimilar than a CD,” but added banks need clarity because “these farmers need all capital they can get right now to qualify for loans.”
Other lenders agreed conceptually but emphasized implementation details that would determine usefulness for underwriting and collateral. Brian Gilbert said the idea could be workable if the account could be used to collateralize operating loans or be structured so banks can recognize the funds in credit decisions. Witnesses offered to work with the member to refine statutory language and safeguards.
Why it matters: a tax‑preferred reserve could give producers a voluntary tool to self‑insure and improve balance‑sheet resilience, but lenders said its value for credit access depends on treatment in bank underwriting and legal protections.
Ending: Members asked staff and witnesses to continue technical work on account design and legal treatment; no vote or bill text was enacted at the hearing.
