News broke this week confirming that Farm Credit has approved not one, but two lines of credit to telecom industry giants.
The suspect lending practices of the Farm Credit System are beginning to come under fire, from both industry publications and independent news outlets.
Notably, the National Mortgage Professional Magazine posted a scathing review of the System’s financial overstepping, highlighting some of the GSE’s more egregious decisions — chief among them, the $725 million loan to Verizon, as well as a $350 “credit agreement” with Frontier Communications Corporation. Both massive loans were for corporate buyouts.
The article notes that:
The Farm Credit System is unique because it is the only GSE that also serves as a lender. The system is a network of borrower-owned lenders and specialized service organizations that are supposed to serve communities of 2,500 and less. But demographic shifts from rural communities to urban and suburban settings resulted in this GSE aiming its financial activities elsewhere—much to the chagrin of the commercial bankers that the Farm Credit System works directly against.
The tide is beginning to turn — but financial crisis can only be avoided when enough people have made their voices heard to the powers that be — that enough is enough, and this organization needs to be reined in.
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