Pub. 4 2015 Issue 3

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 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