Pub. 12 2017-2018 Issue 3

WWW.NEBANKERS.ORG 22 BERT ELY’S FARM CREDIT WATCH® Shedding Light on the Farm Credit System, America’s Least Known GSE © 2017 Bert Ely How the FCS Gets Away With Accepting Deposits B ANKERS INMANY AREASOF THE COUNTRY HAVE DISCOVERED that the Farm Credit System (FCS) associations they compete against effectively are accepting deposits. The associations accept these funds as one element of the cash management services they offer to their member/borrow- ers. Technically, the funds deposited with the FCS represent an advance payment against an outstanding loan or line of credit from the association. Check the Compeer Financial website (www.compeer.com/Home/Agriculture/Ag-Business-Services/ Cash-Management-Services) for a good example of the range of cash management services some associations offer. Note how frequently the word “deposit” is used. FCS institutions are not authorized to accept deposits in the manner that banks do, but years ago the Farm Credit Adminis- tration (FCA) and the U.S. Treasury Department constructed a legal justification for the manner in which deposits can now be accepted by FCS associations. First, the FarmCredit Act permits