If you thought CoBank had put a stop to their irresponsible mission creep, you’d be dead wrong. This time, CoBank, an affiliate bank of the Farm Credit System (FCS), has fallen back on one of its old standards: lending to huge telecoms.
CoBank has a long history of lending to huge telecoms and getting away with it. And in the past few years, it’s only gotten worse. In 2013, CoBank financed Lumos Networks, a company worth $287 million, with a loan of $425 million, a loan worth over 145 percent of the company’s value. Cobank continued the trend in 2014, extending a $350 million loan to Frontier Communications Corporation, a gargantuan company worth over $5.5 billion.
We’d be lying if we said that it got any better.
In January, CoBank exceeded its mandate again, even after the Farm Credit Administration (FCA) was questioned by Congress about its loan to Verizon lending a total of $425 million to two telecoms – $225 million to U.S. Cellular and $200 million to AT&T. And now, in a stunning display of predictability, CoBank has extended a $100 million loan to another giant telecom, this time to Alaska Communications.
In light of this flagrant breach of mandate, Rep. Mulvaney issued a letter to the (FCA), calling for answers. This is a good start, but we shouldn’t wait for the last straw to break the camel’s back. Congress needs to exercise its power to oversee regulators like the FCA to ensure that government-sponsored enterprises, like the FCS in this case, do what they were created to do: help America’s young, small and beginning farmers.