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.
As an independent agency, the FCA is led by a board, comprising three members, one of whom is the chairman of the board and the CEO of the FCA. The board is the executive authority of the FCA: it approves rules and regulations, facilitates the examination of Farm Credit institutions, and requires reports from Farm Credit institutions as it deems fit. The board is integral to the operations of the FCA, and by extension the regulation of a massive, national enterprise with hundreds of billions in assets.
If the board can’t operate, then the FCA can’t.
Earlier this year, the FCA’s chairman passed away, leaving just two members on the board. And the Farm Credit Act requires a quorum of at least two board members to “transact business.” If either of the two sitting board members is incapacitated or otherwise unavailable, the activity of the board comes to a standstill. If the activity of the board comes to a standstill, then the executive function of the FCA comes to a standstill too.
The regulation of the System, then, hangs by a thread. All it takes for the regulator of this behemoth to stop in its tracks is an illness or a career change from one of the board members.
That’s not right, and it doesn’t have to be that way.
There are two options available to pull the FCA back from stopping in its tracks. The first is for the Senate to review and confirm an existing nominee, Rod Brown.
The second option is for Congress to amend the Farm Credit Act to expand the board’s numbers. Then the president would nominate persons to serve on the expanded board, and the Senate would review them and confirm them if it thought appropriate.
The first option is far more reasonable and expedient. And Rod Brown, at the very least, deserves a confirmation hearing. His experience is extensive: a Kansas native with generations of farmers in his family, he has served as the CEO of a community bank in California, one of the largest agricultural states in the country. The FCA would benefit greatly from his wealth of experience, and the Senate Agriculture Committee would do well to assess his qualifications.
The FCA’s ability to regulate the System effectively is at risk. Congress should consider Rod Brown’s nomination before the System lurches toward a crisis.