Banks say USDA's debt forgiveness for minority farmers will cost them money and could affect future loans. Black farmers call that a threat.

Three of the biggest US banking groups want the US Department of Agriculture to reconsider the terms of billions of dollars in planned debt relief for minority farmers, claiming it will cut into banks' profits -- and warn they may have to cut those same farmers off from future loans.

President Joe Biden's $1.9 trillion Covid relief package passed in March includes $4 billion to help pay off farm loans for socially disadvantaged farmers and ranchers -- a group that includes Black and other minority farmers, who have long faced discrimination from lenders and the USDA. The payments will cover up to 120% of outstanding debt for each farmer or rancher, according to the USDA. In a joint letter addressed to Secretary of Agriculture Tom Vilsack last month, the American Bankers Association, the Independent Community Bankers of America and the National Rural Lenders Association say that banks will suffer "lost income" if the farm loans are paid off early. The banks say they will lose the interest they would have earned over the life of these long-term loans. The groups want the USDA to compensate banks for any lost income, the letter states.