The Farm Credit System (FCS) operates under the Farm Credit Administration (FCA). As the FCS’s regulator, the FCA is supposed to keep an eye on the FCS’s various dealings. It’s a monumental task because the FCS is a colossus, with $335 billion in total assets.
The FCA needs resources to adequately monitor and examine all of the System’s institutions. On March 11, FCA Board Chairman and CEO Dallas Tonsager said as much when he presented testimony before the House and Senate Agriculture Appropriations Subcommittees. And to Tonsager’s credit, he has highlighted one of the FCA’s glaring deficits: it doesn’t have nearly enough examiners.
“A key factor driving the FY 2020 budget is our need to hire and train qualified individuals to replace the many employees — especially examiners — who have begun to retire,” said Tonsager. He continued, noting that “approximately a third of our examination staff is eligible to retire within the five-year planning horizon.”
This is a troubling prospect to say the least. The FCA’s examiners are the boots on the ground who travel to FCS institutions to audit and review their accounts. They are the first line of defense. They keep the FCS in line, and they deserve support and reinforcement.
Consider what happens when there aren’t enough examiners. With just the current number of examiners, we have seen FCS associations like Lone Star Ag Credit in Texas suffer from severe “appraisal and accounting irregularities”. And if there had been more rigorous oversight on the FCA’s part, then perhaps CoBank would have noticed that something had gone awry with one of its clients, now a part of a federal investigation.
The FCA has not been the perfect regulator, and it has let the FCS veer off track for decades. The FCS’s loans to CyrusOne LP for a server farm and to Rayonier Inc. to bail out its foreign subsidiary are a testament to that fact. Under the FCA’s watch, the FCS has ballooned out of proportion.
But there’s now a chance for Congress to equip the FCA with the personnel it should have to oversee the FCS. Congress should provide the FCA with the resources it needs to hire and train more examiners. Doing so would be a prudent investment to make sure that the FCS sticks to its mission and to protect America’s taxpayers.