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a d v o c a t e

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t h e

b a n k i n g

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k a n s a s

22

BERT ELY’S

FARM CREDIT WATCH

®

SHEDDING LIGHT

ON THE

FARM CREDIT SYSTEM,

AMERICA’S LEAST KNOWN GSE

©2014 Bert Ely

Two new board members and

new chairman at FCA

On March 9, the Senate confirmed two new members to

the Farm Credit Administration’s (FCA) board of directors.

Dallas Tonsager will assume the board seat now held by Jill

Long Thompson, the FCA’s outgoing chairman and CEO.

Tonsager’s appointment will expire in May 2020; he previously

served on the FCA board from 2004 to 2009. The Senate also

confirmed Jeffrey Hall as an FCA board member for a term

expiring in October 2018. Hall, who replaces Leland Strom,

previously served on the staff of Senate Majority Leader Mitch

McConnell. Ken Spearman, the third FCA board member, has

been appointed the FCA’s new chairman and CEO, succeeding

Long Thompson in that position; his term will expire in

May 2016. One hopes that the two new FCA directors, and

Spearman as FCA chairman, will demonstrate a greater concern

about the FCS lending outside the scope of its congressional

charter than was expressed by Long Thompson and Strom.

Time will tell.

CoBank loans to investor-owned

utilities dismay Rep. Mulvaney

In a March 2 letter to FCA chairman Long Thompson, Rep.

Mick Mulvaney of South Carolina stated “how dismayed

I was to learn” of loans CoBank made in January to two

large, investor-owned telecom companies – $225 million to

U.S. Cellular and $200 million to AT&T. Those loans pile

on top of CoBank’s $350 million loan last June to Frontier

Communications and its $725 million loan to Verizon in

February of last year. Rep. Mulvaney stated that “while lending

to similar entities is permissible, I fail to see how a large,

publically traded telecommunications company is similar to

a small, rural telephone cooperative... I do not believe they

meet the letter or spirit of the statute as a similar entity to

which CoBank may lend... CoBank should have exercised

its discretion not to commit to loans to such entities. Large,

corporate banking transactions with access to global financial

markets are best left to the private sector, not to taxpayers.”

[underlining in the original] It will be interesting to read Long

Thompson’s reply, or Spearman’s, if Long Thompson kicks

the can to him. Interestingly, Mr. Mulvaney is not a member of

the House Agriculture Committee, but he is a member of the

Financial Services and Government Reform Committees. Each

of those committees should be concerned about the extent to

which CoBank is lending outside the agricultural sector of the

economy.

CoBank overreaches, again, in

lending to investor-owned utility

CoBank has overreached, again, when, on March 10, acting

as a co-syndication agent, it participated in a $450 million

unsecured revolving credit facilities for the California Water