Pub. 8 2019 Issue 5

September/October 2019 27 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 CoBank relative to the FCS as a whole, thereby reducing the risk it poses to the solvency of the FCS and therefore the risk the FCS poses to taxpayers. That is, CoBank would continue to exist, but as a vastly shrunken, specialized lender within the FCS. CoBank owns 100 percent of the stock of the Farm Credit Leasing Services Corporation, which specializes in leasing on a nationwide basis a broad range of equipment, machinery, vehicles, and facilities. Possibly this leasing activity should be spun off into an independent entity that could borrow directly from the Funding Corporation or FCS associations could engage directly in leasing activities now conducted by CoBank’s leasing subsidiary. Conclusion Over its 103-year existence, the FCS has undergone several major structural changes as it has grown into a major source of financing for agriculture and agriculturally related activities. Yet it now has an increasingly outdated structure that does not reflect the extent of consolidation that has taken place within the FCS and in agriculture nor does its structure reflect the impact technology has had on the delivery of credit and other financial services to borrowers. Empowering FCS associations to borrow directly from the Funding Corporation while shifting other FCS bank functions to the Funding Corporation and the FCA would improve the operating efficiency of the FCS while reducing the substantial insolvency risk it now poses to taxpayers. 1 The Farm Credit Act is codified as 12 USC. Sec. 2001-Sec. 2279g. 2 Ely, Bert, and Vicki Vanderhoff; The Farm Credit System: Reckless Lender to Rural America, American Bankers Association, 1990, pp. 7-28. 3 Ely, Bert, The Farm Credit System: Reckless Past, Doubtful Future, American Bankers Association, 1999, pg. 8. 4 https://www.fcssw.com/~/media/ An independent licensee of the Blue Cross Blue ShieldAssociation. bcbsks.com KBA 7/19 Your business. You’re busy. We get it . Quality health and dental insurance should be simple. » Personalized expertise saves you time and money. » Affordable options – tailored to your needs. » Comprehensive portfolio of employee benefits. » Largest provider network. » Onsite and online wellness programs and tools. Financial%20Statements/2014%20 Annual%20Report2.ashx, pg. 5 5 https://sitebridge.farmcreditbank.com/f/ other/38/Notification-of-Non-Reliance- on-Prev-Issued-Financial-Stmts- FINAL. pdf 6 https://www.farmcreditfunding.com/ ffcb_live/serve/public/pressre/finin/report. pdf?assetId=371190 7 https://www.fca.gov/template-fca/about/ NumberBanksAssocs18.pdf 8 https://www.farmcreditfunding.com/ ffcb_live/serve/public/pressre/finin/report. pdf?assetId=371190, pages 22 and 79. 9 Ibid., page 79. 10 https://www.fca.gov/template- fca/download/Speeches/Tonsager/ Tonsager30Jan2018.pdf, pg.4; see also https://www.fca.gov/template- fca/download/Speeches/Tonsager/ Tonsager7Mar2017.pdf , pg. 4, and https:// www.fca.gov/template-fca/download/ Speeches/Tonsager/Tonsager1Feb2017. pdf, pg. 4. 11 CoBank is chartered under Title III, Part A, of the Farm Credit Act of 1971, 12 U.S.C. Sec. 2121 to Sec. 2134. 12 https://www.cobank.com/-/media/files/ financials/2017/2017-cobank-annual- re- port.pdf?la=en&hash=76B1C361851F- 746162B7A34D866DA306D53C602F, pp. 10-11. 13 Calculated from call reports submitted to the FCA by FCS banks and associations.