Farm Credit’s Silent on CoBank’s Tell-All

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The Farm Credit Council recently quashed an “Idea Share” because of the Farm Credit System’s (FCS) desperate need for a “strategic shift in direction for reputation management.” It’s possible that the problem with their reputation is the lack of transparency – – something that is clearly not their strong suit.

But nothing can be hidden in each FCS bank’s annual report. CoBank’s annual report is especially revealing.

CoBank’s total loan volume for 2015 was $89 billion: $24.9 billion for agribusiness, $17.8 billion for rural infrastructure and $40.4 billion for strategic relationships (i.e. CoBank’s loans to its subsidiary organizations). And for each of these categories there are 10 subcategories that provide an incredible amount of detail on to what sectors CoBank extended loans.

So when CoBank includes an Other category for each sector’s portfolio — while also providing incredible detail for the rest of the portfolio — it looks suspicious. What loans are included in the Other category? Is it not even worth it to include a footnote that provides examples of the sort of loan that would be included there? Are these loans possibly outside of the FCS’s mission?

The sum of the total volume of loans from the Other categories in all three sectors is $5.24 billion. That’s 1.7 percent of the FCS’s total assets and 2.2 percent of its total loan volume! Those numbers are astoundingly high – and that’s just CoBank’s contribution.

It’s too easy to forget how much a billion dollars really is, let alone five billion. But to add some perspective, the unattributed money in the Other categories could pay for nearly all Farm Service Agency (FSA) loans this year. And remember – that’s just CoBank’s contribution.

Government-sponsored enterprises (GSEs) like the FCS, which is implicitly backed by the federal government and taxpayers, should be as transparent as possible, especially when the GSE’s regulator has admitted that it could be “vulnerable to a market crisis.” Congress needs to make sure that the FCS is playing by the rules, and the first step to achieving that is greater transparency.