Pub. 7 2012-2013 Issue 4

www.nebankers.org 32 Extraordinary Service for Extraordinary Members. FCA Wants Greater Transparency on Enforcement Orders? Aminor, yet potentially important element of the compen- sation regulation is a requirement that FCS institutions pro- vide “timely and transparent communication to shareholders and investors of significant or material events that occur at [FCS] institutions between annual reporting periods.” An FCA summary of the regulation goes on to state that “Boards of Directors must develop policies to identify events to be com- municated. Noticemust bemade within 90 days of the event’s occurrence. The events may be communicated in either a separate notice to shareholders or as part of the quarterly report to shareholders.” The regulation then states that FCS “institutions should consider the following when identifying material and significant events [including] . . . reportable FCA supervisory and enforcement actions,” ideally on the first page of the institution’s quarterly report. [emphasis supplied] As Farm Credit Watch readers know, the FCA is very closed-mouth about enforcement actions it takes against FCS institutions—unlike bank regulators, the FCA never names the entities or persons subject to an enforcement order. For example, the FCS’ June 30 Quarterly Information Statement stated that eight of the FCS’ 82 associations, with total assets of $3.26 billion, had entered into “written agreements” (i.e., enforcement actions). None have been publicly named. One of those associations, with $975million in assets, was slapped with an enforcement order during the second quarter of 2012. A bit of sleuthing revealed that association to be Farm Credit of Florida. While existence of that order is buried deep in the association’s second-quarter report, one can readily wonder how many of its borrower/shareholders, much less other parties, know about this order. If the FCA is to get serious about transparency, it needs to establish how associations will report all supervisory actions to their members as well as to the general public. More importantly, the FCA should follow the lead of the bank regulators and promptly disclose who it has taken an enforcement action against. Report FCS Lending Abuses Bankers are continuing to send Farm Credit Watch reports of FCS lending abuses such as FCS loans for rural estates, weekend getaways, and hunting preserves. Email reports of similar lending abuses in your market to green- acres@ely-co.com. Please provide as much detail as pos- sible about any loan that violates the spirit, if not the law, governing FCS lending. Z Q FCW — continued To contact Bert Ely, email bert@ely-co.com ; fax (703) 836-1403; phone (703) 836-4101; or mail PO Box 320700, Alexandria, Va. 22320.