Lack of Oversight Leaves Sprawling Farm Credit System Unaccountable

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Good government groups in civil society often take on the task of making sure government fulfills its mission, and does so efficiently. Each has its niche, and examines different parts of the government. One important group, founded by the late U.S. Senator Richard Lugar (R-IN), focuses on many of the Senator’s signature achievements in his career – nonproliferation of weapons of mass destruction, global food security, foreign assistance effectiveness and global development, energy security, and enhancing bipartisan governance. The Senator’s eponymous Lugar Center brings together expert sources and sponsors research to improve the quality of debate and bridge ideological divides around these important issues.

The Center is a staunch supporter of congressional oversight and its role in our government.  The Center calls oversight “an essential component of American democracy that improves the transparency and performance of our government, illuminates ethical malfeasance within our government or the private sector, and guards against the accumulation of unchecked power in the executive branch. Congress is best able to uphold its responsibilities under Article I of the Constitution when committees are strong and congressional processes are devoted to regular order.”

To that end, the Center recently completed the monumental task of developing a database of every congressional committee’s hearings going back to 2009.  Moreover, to illustrate the hazards of ignoring oversight duties, the Center recently released a scorecard of all 20 committees in the House, and all 19 in the Senate. The Senate Agriculture Committee ranked square in the middle with a “D+” score. Sad to say, but the House Agriculture Committee came in third to last, with a “D”.

Both committees earned their scores based on the number of hearings they have held this Congress as compared to each committee’s historical maximum. The Senate committee is at 73 percent of its maximum, while the House committee is at 39 percent. But both committees have a glaring omission. Neither has conducted an oversight hearing this session. Neither has conducted true oversight or investigative hearings since, at the latest, 2012.

This is particularly troubling when considering the fact that these committees have under their purview the Farm Credit System (FCS).  FCS isn’t just another government agency that gets an annual review. It’s a massive, $365 billion government-sponsored enterprise (GSE). It poses immense risk to the taxpayer should it face financial trouble and need federal support. GSEs like Farm Credit operate with government authorization, but have a great deal of independence in their day-to-day affairs. Without oversight, Farm Credit has the opportunity to abuse that independence.

Reform Farm Credit’s readers know that there’s plenty of opportunity for both committees to investigate what Farm Credit has done with its independence. For years, Farm Credit has played fast and loose with the intent of the Farm Credit Act, lending to a publicly-traded real estate investment trust invested in “server farms”, or to telecoms under the dubious “similar entity” rule.

Beyond stretching the intent of the law, Farm Credit performs poorly with mandates from Congress. There are plenty of questions each committee could ask of Farm Credit: what happened to Lone Star Credit? Why did FCS of Hawaii disappear? What kind of relationship does CoBank have with its clients? Why does the FCS underserve Indian Tribes and socially disadvantaged farmers and ranchers? Why has the FCS been triple counting loans in its reports on young, beginning and small farmers?

These are but a few of the many questions each committee could ask the FCS, and the committees do have the power to investigate and oversee the FCS’s activities. And while they must conduct oversight for so many government bodies and other entities, the FCS’s range of questionable conduct should put it square within the committees’ spotlight.