Pub. 11 2016-2017 Issue 4
www.nebankers.org 22 Extraordinary Service for Extraordinary Members. Real and Present Danger — continued from page 25 CONNECTING OUR CLIENTS TO THE POSITIVE OUTCOMES THEY SEEK. of those characteristics; or just one of those characteristics. Such groupings would provide a much more accurate picture of the scope of the FCS’ YBS lending. Further, the FCS should exclude from its YBS lending data all loans to YBS farmers that are guaranteed by third parties, such as a wealthy farmer who guarantees the loans of a 27-year-old son or daughter who has his or her own farm. In the interest of ensuring that the FCS publishes accurate, meaningful information about the FCS’ YBS lending, surely IG Dean could make that rec- ommendation. Cooperative Finance Association & CoBank A banker recently sent me the 2015 annual report of the Kansas City, Mo.-based Cooperative Finance Association (CFA). CFA, which is largely financed by CoBank, lends to agricultural cooperatives and to farmers “sponsored” by a cooperative that belongs to CFA. At Aug. 31, 2015, CFA had outstanding loans of $28.7million to cooperatives and almost $289million to farmers. Those loans were largely fundedwith $265.2million borrowed fromCoBank. CFA is profitable and well-capitalized (equity equaled 16.5 percent of assets) so it poses no apparent credit risk to CoBank. However, CFA loans to farmers essentially represent loans that otherwise would be made by a commercial bank or by the FCS association serving the territory where the farmer is located, possibly even an FCS association that is funded by CoBank. CFA also has arrangements with several FCS associations to buy and sell loan participations. One can reasonably ask whether CFA in fact is a “shadow” FCS association since it is funded by CoBank and lends to cooperatives that otherwise would borrow directly from CoBank as well as lending to farmers who otherwise would be borrowing from an FCS association or a commercial bank. Do other “shadow” FCS associations exist? Let me know. Report FCS Lending Abuses Bankers are continuing to send Farm Credit Watch reports of FCS lending abuses such as FCS loans for ru- ral estates, weekend getaways, and hunting preserves. Email reports of similar lending abuses in your market to: green-acres@ely-co.com. To contact Bert Ely, email bert@ely-co.com, phone (703) 836-4101, fax (703) 836-1403, or send mail to P.O. Box 320700, Alexandria, Va. 22320. If your bank belongs to the American Bankers Association (ABA), you can enjoy a free email subscription to FCW or you can read it monthly online at www.aba.com . To receive FCW by email or to manage your subscription, visit ABAMember Email Bulletins at www.aba.com/Tools/Ebulletins/Pages/ default.aspx. For other inquiries, please contact Barbara McCoy at the ABA at (800) BANKERS or bmccoy@aba.com .
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