WASHINGTON — The banking industry has a keen interest in one of the most competitive races in the country.
Rep. Zach Nunn, R-Iowa, a freshman lawmaker on the House Financial Services Committee, is locked in a tight contest with Democratic challenger Lanon Baccam, an Army veteran and former USDA official. Nunn narrowly won the district against another HFSC lawmaker, Democrat Rep. Cindy Axne, two years ago.
This contest is one of the few races that could determine control of the U.S. House for the next few years. Out of hundreds, Republicans would likely retain leadership of the chamber if they win 12 of the 27 tossup races, including Nunn's, in 2024.
Nunn, a first-time incumbent, is in a dangerous position, with his Democratic competitor and himself just about
Around a third of voters in Nunn's district don't align with any party in particular, and those are the people he would need to win in November, said Timothy Hagle, a political scientist at the University of Iowa.
"Those are the folks that decide the election statewide and in the congressional districts here in Iowa," Haggle said. "They get kind of divided up early, and they do like incumbents, but since this is his first time around, they may not be as familiar with him, so that makes him a little bit more vulnerable."
It's also one of the races that banking groups are backing most intently ahead of Election Day.
The American Bankers Association, for example, has given Nunn's campaign $20,000 since 2023, and the Super PAC called Friends of Traditional Banking has endorsed Nunn's candidacy and urged bankers to donate to his race.
Central to that support is some of the work that Nunn has pursued on the House banking panel. In a radio ad, the ABA and the Iowa Bankers Association touted Nunn's support of the so-called
It would do that by excluding the interest received by a qualified lender on all loans secured by farm real estate and aquaculture facilities from gross income, as well as the interest received by a qualified lender on home mortgage loans that do not exceed $750,000 in rural communities of no more than 2,500 people.
It's a technical and complicated issue that plays well in Iowa's competitive political landscape — and at a time when few bank policy issues have found their way into the national political conversation.
It would also be a boon to many small banks, like many that still dot Iowa's small towns.
"We are very much a community banking state," said John Sorensen, president and CEO of the Iowa Bankers Association. "We have a lot of small, rural, what we call farm banks. About 25% of our economy is either agriculture or agriculture-related, so it's still a very significant part of what we do here."
The ACRE Act would help farm banks compete with the Farm Credit System, a government sponsored enterprise that can access capital markets at a much lower cost, Sorensen said.
"The cost of funding is much lower than ours, and their tax situation is much better than what community banks have," he said. "So what ACRE will do is allow our banks to be more competitive by having that same advantage. It puts our farm banks on a level playing field with a significant competitor."
The third congressional district in Iowa that Nunn is trying to win stretches from the suburbs of Des Moines to the furthermost reaches of the Omaha metropolitan area, which crosses over into Iowa in Council Bluffs.
Most of his district isn't made up of farmers or even people who live in rural areas — but even so, the idea of rural life looms large in Iowa.
"In some states, or some communities, the symbolic value of ruralness extends beyond the boundaries of strictly rural communities," said Nicholas Jacobs, a political scientist at Colby College in Maine who studies the idea of the rural voter.
"This is a place where the image of rurality is everywhere, even in the suburbs, even in the cities. There's a lot of urban people in Iowa, but the idea that it's still a small town state and still rural is huge."
Preserving that lifestyle, he said, can extend well into the financial sector, especially when it comes to politics and policy.
"There's a story that people tell themselves — and you hear it among laypersons, not just experts — about how regulation of the financial industry harmed rural banking in particular," he said.
Part of the reason that rhetoric tends to play well in communities like Iowa that tend to put a lot of emphasis on their rural identity, Jacobs said, is that it intertwines with larger anxieties about the way the world is changing.
"The local rural bank is a very highly visible institution," he said. "It was once a sort of signal about small town prosperity."
But as banks went through rapid consolidation in the 1990s and early 2000s, a lot of these local institutions closed up, and larger banks became the dominant players in many communities. Now, the dwindling number of farmers are getting capital at either larger banks or some of the remaining small ones, and a lot of that has informed narratives about the decline of rural life.
"There was this very visible storefront bank, and now that's gone or declined in size, so when we talk about the vitality of small times or rural communities, these were prestigious institutions," Jacobs said. "So politically, even if people don't have the complex story of banking regulation, it does fit into that larger story."
