Pub. 5 2016 Issue 7

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 26 ©2016 Bert Ely THE TREASURY DEPARTMENT IS STILL SITTING ON MY FOIA REQUEST BERT ELY’S FARM CREDIT WATCH ® SHEDDING LIGHT ON THE FARM CREDIT SYSTEM, AMERICA’S LEAST KNOWN GSE O N MAY 8, 2014, I filed a Freedom of Information Act (FOIA) request with the Treasury Department to obtain documents related to the creation of the $10 billion line-of-credit the FCS obtained from the Treasury in September 2013. More than two years later, I still have not received any documents, despite repeated promises that my request is being processed. The real reason Treasury may be dragging its feet is that these documents might tell an embarrassing story, at least embarrassing for the FCS. Hopefully, we will eventually learn the real story behind the creation of this line-of-credit. Technically, the line-of-credit was extended by Treasury’s Federal Financing Bank (FFB) to the FCS Insurance Corporation (FCSIC), an affiliate of the Farm Credit Administration (FCA). The FCSIC, somewhat comparable to the FDIC as it collects premiums from FCS institutions, guarantees the timely payment of principal and interest on the Systemwide Debt Securities issued by the FCS through the Federal Farm Credit Banks Funding Corporation. The three FCA directors also serve as the FCSIC’s directors. As of March 31, 2016, $245 billion of FCS systemwide debt was outstanding while the FCSIC had total assets of $4.14 billion. This line-of-credit has been renewed annually, as of September 30. Most likely it will be renewed again this year, extending it to September 30, 2017. Most interesting is the fact that Congress never authorized this line-of-credit for the FCS, as it has for other federal financial entities, such as the FDIC’s $100 billion line- of-credit at the Treasury, the Federal Home Loan Banks’ $4 billion Treasury line-of-credit, and the NCUSIF’s $6 billion line of credit at the Treasury. The FCSIC has not yet tapped its line-of-credit, but can do so “when exigent market circumstances (a general disruption in financial markets) make it extremely doubtful that [FCS] banks will be able to pay maturing debt obligations that [the FCSIC] insures.” The genesis of the FCS line-of-credit, or rather the rationale for creating it, lies in a report the Brookings Institution, a