Nebraska, the heartland of America, where corn and wheat grow tall and cattle grow fat. An outside observer would think that in Nebraska, of all places, there would be a lot of support for the Farm Credit System (FCS), right?
Take another guess.
Dr. Ernie Goss, an economist based in Omaha, recently released a report that shows the true story about how Farm Credit operates in Nebraska. His conclusion is clear: the FCS is in desperate need of reform. His findings include:
- “If the FCS were a bank, it would be the ninth largest bank in the country; however, as a GSE, FCS is regulated much differently, thus potentially exposing taxpayers to another multi-billion dollar bailout similar to what occurred in 1987.”
- “FCS enjoyed a tax-subsidized net profit of $4.6 billion in 2013 while paying just 4.8 percent in combined federal, state, and local taxes, compared to a tax rate of 20.6 percent paid by Nebraska’s hometown banks.”
- “The Dodd-Frank Act and other federal legislation requires hometown banks to make local investments for the purpose of stimulating community redevelopment. FCS does not face the same regulatory environment and investment requirements as Nebraska’s hometown banks.”
- “Because of a lack of transparency and limited reporting, Goss & Associates found it impossible to effectively evaluate whether FCS is still achieving its congressional mandate to provide lending to young, beginning, and small farmers.”
These are points that Reform Farm Credit has addressed, and for good reason; taxpayers shouldn’t be on the hook for a potential $28.3 billion bailout, nor subsidizing a government-sponsored enterprise (GSE) that’s acting like a commercial bank, nor allowing lax regulation by the Farm Credit Administration (FCA), nor accepting the FCA’s shabby attempts to misrepresent the facts.
Congress has taken the first step by calling for answers from the FCA, but one hearing isn’t enough. The FCS is huge, it has strayed from its mission and the FCA is doing little to stop it. It’s time for Congress to keep making sure that the FCS and the FCA are sticking to their mandates. If not, taxpayers will have to pay the price.