Pub. 1 2012 Issue 8

December 2012 21 l e a d i n g a d v o c a t e f o r t h e b a n k i n g i n d u s t r y i n k a n s a s BERT ELY’S FARM CREDIT WATCH ® SHEDDING LIGHT ON THE FARM CREDIT SYSTEM, AMERICA’S LEAST KNOWN GSE ©2012 Bert Ely FCSA’s Black Hills “Cabin” Sells for $2.1 Million L AST MONTH’S FCW ALERTED BANKERS TO THE October 11 auction of a 6,500 square foot “cabin” in the Black Hills of South Dakota that had been foreclosed on by Farm Credit Services of America (FCSA), the FCS’s second-largest association. The “cabin” had been built for a Hollywood TV producer and financed by FCSA, hardly the type of loan Congress envi - sioned when it created the FCS to provide credit to farmers and ranchers unable to obtain credit from other sources. The auctioneer divided the 55-acre property into two parcels – the “cabin” on one parcel and other buildings, including a 2,100 square foot “guest house,” on the other par - cel. Given the amount of land involved, the luxurious design of the main cabin, and all the fancy facilities, such as a Barnmaster Equestrian barn, a Morton shop building, and much, much more, a $2.1 million selling price almost certainly does not cover what FCSA lent on this “farm.” It will be interesting to see what FCSA has to say about the size of its loss on this loan in its third-quarter report to its member-borrower-shareholders. FCA Orders Greater Transparency on FCS Pay, But Is It Enough? O N SEPTEMBER 13, THE FARM CREDIT Administration (FCA), the FCS’s regulator, issued a final regulation on senior officer compensation disclo - sures and related topics. To say that FCS insiders (of - ficers and directors) do not like the proposed regulation is an understatement. According to the FCA, it received 458 comments from individuals and entities associated with the FCS. In reviewing the list of those who commented, I did not spot a single letter coming from outside the FCS. The letter writers were overwhelmingly opposed (if not universally opposed – I did not read every letter) to the FCS’s many common-sense proposals that would increase the transparency of the compensation and benefits, including retirement plans and severance pay, of FCS officers and directors. Even more controversial than the increased compensation disclosures is a required “say on pay” vote on executive compensation. The rule gives an FCS institution’s “shareholders the opportunity to cast a non- binding, advisory vote on senior officer compensation. The vote would be continued on page 22