Pub. 5 2016 Issue 4

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 24 BERT ELY’S FARM CREDIT WATCH ® SHEDDING LIGHT ON THE FARM CREDIT SYSTEM, AMERICA’S LEAST KNOWN GSE ©2016 Bert Ely WASHINGTON POST ARTICLE PULLS BACK CURTAIN ON THE FCS O n April 11, The Washington Post ran a long (1,226 words) and very critical article on the FCS that was neatly summarized in its headline: Critics say Farm Credit System needs to be reined in. The article clearly reflects the tone of the December 2 hearing the House Agriculture Committee held on the FCS where many committee members asked tough questions and expressed criticisms of the FCS and especially of CoBank. That such an article appeared in the Washington Post is especially important in the FCS debate because the Post is so widely read inside the Washington Beltway, and especially by members of Congress and their staffs. Defenders trotted out their usual defenses of the FCS, such as justifying CoBank loans to Verizon and Frontier Communications because they “provide landline voice service, Internet and wireless access and other services to rural areas.” Other FCS lending abuses cited by the Post article, all of which were highlighted at the House Ag Committee hearing, included the Cracker Barrel loan and loans to finance a carwash, a vacation home on the Gulf Coast, and an exotic hobby farm. The article ended with the story of an FCS loan, first reported in the FCW, to finance a television producer’s purchase of a 6,500-square-foot home on 55 acres in the Black Hills of South Dakota. That loan soon went into foreclosure. One interesting aspect of the Post article was the narrowness of the FCS’s defenders quoted in the article – just Bob Engel, CoBank’s CEO, and Todd Van Hoose, CEO of the Farm Credit Council, the FCS trade association. Until recently, Van Hoose was in charge of government affairs for CoBank. It is almost as if CoBank is the FCS. While many other FCS institutions have abused the FCS lending authorities, it appears that CoBank’s abuses, and especially its loans to investor-owned utilities, have drawn unfavorable attention to the entire FCS. One can reasonably wonder what divisions CoBank is creating within the FCS. How the FCS (read CoBank) tried to spin the Post article A week after the Post article appeared, the Farm Credit Council posted on its blog, called The Aggregator, a post headlined “Washington Post Highlights Farm Credit’s Mission