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What the FCA Chairman told Congress about Farm Credit
Last month the House Agriculture Subcommittee on Commodity Exchanges, Energy, and Credit held a hearing to review agricultural credit conditions and the Farm Credit System’s (FCS) role in creating those conditions. Testifying before the subcommittee was Glen Smith, the Chairman of the Farm Credit Administration (FCA), the FCS’s regulator.
The question: should we be worried about agricultural credit conditions?
Key Topics for Farm Credit Oversight Hearing
Last week the House Agriculture Committee announced that it would hold an oversight hearing on the Farm Credit System (FCS) and its regulator, the Farm Credit Administration (FCA). It’s been four years since this committee has held a formal oversight hearing – in the meantime, it held a (scathing) “review” in 2017 following the Senate Agriculture Committee’s oversight hearing in 2016 and the House Appropriations Agriculture Subcommittee’s oversight hearing in 2017.
It’s safe to say that Farm Credit is due for another oversight hearing.
In the past two years, Farm Credit has earned its reputation for mission creep and inadequate service to the farmers who need the most support. In the past two years, Farm Credit has extended loans to health care and senior living facilities, to home-buyers of dubious qualification, and to professional show-jumpers purchasing equestrian property from a billionaire. These are noteworthy and illustrative, but not exhaustive. While Farm Credit has strayed far from its mission, it has become a massive entity, with more than $352 billion in total assets.
Troubling Questions for Farm Credit Oversight in CoBank Co-op Scandal
The sad and shocking story of multimillion dollar embezzlement at the Ashby Farmers Cooperative Elevator (AFCE) in Minnesota keeps getting worse. CoBank and its regulators didn’t perform their due diligence, and now CoBank’s farmer-owners are set to receive only a small fraction of their investment in restitution.
CoBank is the largest financial institution in the Farm Credit System (FCS) with more than $138 billion in total assets. It alone has the authority to lend to cooperatives which provide services related to agriculture, and AFCE is one of those cooperatives.
Last year, AFCE closed its doors because its manager, Jerry Hennessey, embezzled money from the cooperative for years, “with much of the money spent on big-game hunting trips around the globe.” During all of this time, CoBank had maintained a financial relationship with AFCE, lending it millions of dollars. Continue Reading
Amid Farm Economy Troubles, Farm Credit Administration Releases 2020 National Oversight Plan
This week at a press briefing in Washington, DC, three CEOs of Farm Credit System (FCS) institutions – AgriBank, Carolina Farm Credit and American AgCredit – announced that the System’s portfolio of “stressed” agricultural loans nearly doubled, from four percent to seven percent. Not long after, the System’s regulator, the Farm Credit Administration (FCA), released its 2020 National Oversight Plan.
It could not come at a better time. The FCA’s record on enforcing the Farm Credit Act and keeping the System in line is spotty at best. American agriculture is at risk, and the FCA needs to increase its oversight of the System so that it doesn’t leave farmers – especially young, beginning and small farmers – out to dry like it has in 2018.
Farm Credit Invests in Nursing and Rehabilitation Facility
The Farm Credit Administration (FCA) is the Farm Credit System’s (FCS) ostensible regulator. Occasionally, it does its job and enforces the letter and the spirit of the Farm Credit Act. But usually, it falls woefully short of holding the FCS accountable, such as allowing it to extend loans to a publicly-traded real estate investment trust (REIT) for “server farms.” At the very least, its inefficacy is public.
But last week the FCA unveiled a nasty surprise. On September 12, the FCA issued a news release providing a recap of the FCA’s monthly board meeting. Buried at the bottom of the release is a list of “notational votes,” which are “actions taken by the FCA board between board meetings.” On August 9, the FCA board “approved a request by AgCredit, ACA, to purchase bonds to be issued by a skilled nursing and rehabilitation facility in rural Wyoming.”
Can Confirming Rod Brown Save Farm Credit from Crisis?
As a sprawling, $349 billion government-sponsored enterprise (GSE), the Farm Credit System (FCS) needs a government regulator to make sure it’s acting lawfully and in line with its mission. The System’s regulator, the Farm Credit Administration (FCA), is largely ineffective, letting the System get away with underserving Indian tribes and socially disadvantaged farmers and ranchers, and failing young, beginning and small farmers in 2018.
It’s hard to imagine things getting worse.
2020 Presidential Candidate Pushes Reforming Farm Credit
It’s campaign season! Even though the 2020 elections are more than a year away, presidential candidates have hit the campaign trail to discuss policy and share their vision with voters.
Reform Farm Credit is pleased to announce that reforming Farm Credit is now a 2020 campaign issue!
Earlier this month, Senator Elizabeth Warren (D-MA) released her proposal for “A New Farm Economy.” Detailed and thorough, it outlines her many ideas on how to reinvigorate rural America, including how to expand farmers’ access to credit by reforming the Farm Credit System (FCS).
New GAO Report Finds that Farm Credit is Underserving Socially Disadvantaged Farmers and Ranchers
When Congress reconsidered federal agricultural policy in the 2018 Farm Bill, it made a few changes to the Farm Credit System (FCS).
Among the Farm Bill’s many important provisions, Congress tasked the Government Accountability Office (GAO), commonly known as “Congress’ watchdog,” with investigating how Farm Credit is addressing the agricultural credit needs of socially disadvantaged farmers and ranchers (SDFRs).
Farm Credit’s got a lot of work to do.
Farm Credit Florida Provides $8.5 Million Loan for Equestrian Site
The Farm Credit System’s (FCS) constituent associations are no strangers to funding luxury purchases extraneous to its mission to support American agriculture. Loans for mansions in the Denver suburbs, purchasing the naming rights for a golf tournament and loans for luxury properties in Hawaii find their place on Farm Credit associations’ ledgers.
Those entries won’t be lonely any time soon.