The Farm Credit Administration (FCA) is the Farm Credit System’s (FCS) regulator. But more often than it should, the FCA acts as Farm Credit’s facilitator. Under the FCA’s “regulation,” the FCS has gotten away with making loans to huge telecoms, letting a co-op go bankrupt due to lack of oversight, and merging its institutions to an intolerable degree. It has done all of this while failing to provide sufficient credit for young, beginning and small farmers.
Time for the FCA to step up its oversight.
Well, credit where credit’s due. Last month, the FCA took a major leap forward to increase its regulatory authority to hold bad actors in Farm Credit accountable. On January 15th, the FCA finalized a rule to increase civil money penalties (fines) so that they keep up with inflation. This is a small step, but an important one all the same.
To be clear, this does not drastically increase the dollar amount of civil money penalties. Before the rule was finalized, the maximum penalty for each day during which a violation of the Farm Credit Act occurred was $1,000. Now, after implementation, the maximum daily fine is $1,052.
But the exact figure isn’t what’s important. What’s important is the shift in focus, and the understanding on the FCA’s part that it should be executing enforcement actions. This finalized rule could be a signal that the FCA is ready to begin holding bad actors at Farm Credit accountable.
Although the latest Farm Bill had some egregiously Farm Credit-friendly provisions, like scrapping caps on pay for Farm Credit executives, it did include one provision instituting an industry-wide prohibition on persons removed from serving at a Farm Credit institution. The expansion of FCA authority is a clear sign to the FCA that it must take action, and this latest rule could be the first step.
This is a welcome development, and Congress should take notice: it’s possible for the FCA to do the right thing. The FCA’s track record of enforcement leaves much to be desired. But with consistent congressional oversight, it’s possible for the FCA to keep Farm Credit on the right track.