Pub. 7 2012-2013 Issue 5

January | February 2013 21 Extraordinary Service for Extraordinary Members. Bert Ely’s FARM CREDIT WATCH ® Shedding Light on the Farm Credit System, America’s Least Known GSE © 2013 Bert Ely Jill Long Thompson New FCA Chairman J ILL LONG THOMPSON, A MEMBER of the Farm Credit Administra- tion (FCA) Board of Directors since March 2010, was named chairman and CEO of the FCA by the President, effective Nov. 27, 2012. Her term as a member of the FCA Board will expire on May 21, 2014. Long Thompson succeeds Leland Strom, who has served as FCA chairman and CEO since May 2008; his term as an FCA director expired on Oct. 13, 2012. As provided under the Farm Credit Act, Strom is not eligible for reappointment to the FCA Board. However, he can continue to serve on the board until his successor has been confirmed; his successor must be a Republican or political independent. Chairman Long Thompson brings an impressive background to her chairmanship. After growing up on a family farm in Indiana, she earned an MBA and a Ph.D. in business and taught at Indiana University, Val- paraiso University, and Manchester College for many years. Long Thomp- son represented northeast Indiana in the House of Representatives from 1989 to 1995 where she served on the Agriculture Committee. As a con- gresswoman, she introduced legisla- tion banning members of Congress from accepting gifts; this legislation also promoted increased transpar- ency in Congress by expanding dis- closure requirements for lobbying activities. From 1995 to 2001, Long Thompson served as undersecretary for rural development at the USDA where she oversaw an annual budget of $10 billion and a staff of 7,000 employees—a much larger budget and staff than the FCA has. Given her interest in transparency in government, Long Thompson has an excellent opportunity to improve transparency within the FCA and the Farm Credit System (FCS) while making the FCA a more effective, and independent, regulator. Notably, the FCA should follow the example of the bank regulators and publish on the FCA website and in news releases enforcement actions taken against FCS institutions and their officers and directors. No longer should the bor- rowers/owners of FCS institutions be kept in the dark about financial prob- lems in their institutions nor should the misdeeds of FCS officers and di- rectors be covered up, as occurred re- cently at AgSouth Farm Credit (read more at www.nebankers.org/images/ files/pdf-members/government- relations/bert-ely/2012-176-bert-ely. pdf). The FCA can greatly enhance its transparency by repealing a 2005 Policy Statement governing FCA en- forcement actions. That statement bars the publication of “information that would identify the [FCS] institu- tion and/or persons involved” who are subject to an enforcement action. The time has come for the FCA to fully inform the owners of FCS institutions about enforcement actions. Long Thompson can make the FCA a more effective, and indepen- dent, regulator by establishing a robust process at the FCA for record- ing, publicizing, and acting upon complaints about FCS institutions that engage in activities not permit- ted under the Farm Credit Act. An- other issue Long Thompson needs to investigate is the FCS’ widespread predatory pricing, which clearly is banned by the very first section of the Farm Credit Act. Specifically, that section provides “that in no case is any [FCS] borrower to be charged a rate of interest that is below com- petitive market rates for similar loans made by private lenders to borrowers of equivalent creditworthiness and access to alternative credit.” Long Thompson also should review the FCS’ Rural Community Investments “pilot” program, under which FCS institutions can issue “Rural America Bonds.” This three-year pilot program was first approved in 2005, almost eight years ago. The inappropriate- ness of this investment activity by FCS institutions should be readily apparent by now—Long Thompson should take the lead in ending it. Long Thompson also should ex- amine AgDirect, the indirect custom- er financing program written about in previous issues of Farm Credit Watch. Created by FCS of America (FCSA), AgDirect is now marketed by a number of FCS associations. Under this program, farm equipment dealers finance sales to their customers and then sell a 100 percent participation in those loans to AgDirect, which then sells the participation to AgriBank, an FCS bank. FCSA earns a fee for originating and servicing these Q New FCA Chairman — continued on page 22