It’s too often that the Farm Credit System (FCS) and its constituent banks and associations get away with skirting the law either by taking deposits, lending to bail out foreign companies or lending to companies building “server farms.” The list could go on and on.
Accountability is alien, but Congress wants that to change.
Last week, the House Committee on Agriculture issued a favorable report on the Farm Bill, sending it to be debated on the House floor. Buried in the 1000+ page bill, a section entitled Scope of Jurisdiction enables the Farm Credit Administration (FCA) to pursue oversight and legal action against FCS officers, employees, shareholders and agents for up to six years after they have stopped acting as such. This is a huge win for champions of accountability and for anyone who thinks that the FCA should be given more tools to keep the FCS in line.
How will that play out on the ground? No one can say for sure. Given the FCA’s routine reluctance to exercise any sort of meaningful regulation of the FCS, it is possible that it won’t use this authority, citing that there haven’t been any infractions to merit it.
But anyone who’s been paying attention knows that’s just not true. Two years ago, a judge in Connecticut included in one of his rulings that Farm Credit East created “nothing more than a shell corporation to funnel federal money” for one of its customers, who must be a shareholder if he is a customer. The judge also noted that it was “up to the IRS and relevant federal agencies to figure out.”
If the Scope of Jurisdiction section in the Farm Bill is enacted, the FCA will have the legal authority to investigate not just Farm Credit East, but the employees who created the shell corporation and the customer-shareholder that illegally benefitted from it.
That’s just one example, and as powerful as it is, Congress is likely not basing its decision to give the FCA more power on that alone. It recognizes that there are bad actors across the entire system who aren’t playing by the rules, and that that’s not fair to America’s farmers and producers. Including the Scope of Jurisdiction section – giving the FCA more enforcement power – signals Congress’s intent that the FCA needs to keep the FCS in check. The House Committee on Agriculture deserves our thanks for taking a step towards making Farm Credit accountability a priority!