In March, President Biden issues a relief package for African American farmers, but three large banking organizations have decided to fight against the package arguing that this initiative, which is helping African American farmers, may cut into profits and hurt investors.
The $4 billion debt relief package is part of President Joe Biden’s $1.9 trillion stimulus package. This relief package was proposed to compensate for the long history of discrimination experienced by African American farmers.
Although, none of the money has reached any minority farmers. In April, the USDA was sued by white farmers who were complaining of reverse discrimination. Now three of the nation’s largest banking groups have joined in on the fight.
The banks are reportedly fighting the package because paying off the debt of these farmers early would cause banks to lose out on future interest payments. The banks have argued that the government should pay beyond the loan amounts to make up for the lost interest payments. The banks also mentioned that banks will likely be more hesitant to expand credit in the future if the loans are paid back sooner through President Joe Biden’s relief package.
The bank groups stated that if the debts are not properly paid of the USDA’s actions could seriously damage the market by creating an unreliable environment with unpredictable pricing. As a result, there would be a notable loss of capital for future lending. Although, the USDA has not shown any indication of reversing the plan. Government officials are reportedly to begin the debt relief procedure in the near future.