Pub. 8 2013-2014 Issue 2

July | August 2013 25 Extraordinary Service for Extraordinary Members. FCS use of a UBE is acceptable, this organizational form is open to abuse. UBEs are organized or chartered under state law and can be owned by one or several FCS institutions. According to an FCA news release, UBEs may be used for the following limited business purposes: • To hold and manage unusual and complex collateral associated with certain acquired properties such as a business the FCS lender may have foreclosed on. • To provide limited services integral to the daily internal operations of an FCS institution. • To provide functions and services necessary or expedi- ent to the business of FCS institutions owning the UBE, except that an FCS institutionmay not engage in direct lending through a UBE. • To invest in rural business investment companies (RBICs). While UBEs can provide useful services to FCS institu- tions, meet other legitimate needs within the FCS, and yet operate within the confines of the FarmCredit Act governing the FCS, there will be ample opportunity for FCS institu- tions to abuse UBEs such as investing through RIBCs. The public must be able to closely monitor UBEs to ensure that no abuses occur. The FCA stated it will “establish standards for the proper and adequate disclosure and reporting of [FCS] UBE activity and ensure that the [FCS’] use of UBEs remains transparent and free from conflicts of interest.” How the FCA will do that has not been established. One way the FCA could do that would be to requireUBEs to file quarterly call reports, just as FCS associations and banks nowdo. Another step to ensure transparency and comply with the act would be to require UBEs to publish annual reports detailing their activities. Absent these disclosures, UBEs will operate too far into the shadows of the FCS. Report FCS Lending Abuses Bankers are continuing to send FarmCreditWatch 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 possible about any loan that violates the spirit, if not the law, governing FCS lending.  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 Farm Credit Watch or you can read it monthly online at www.aba.com . To receive FarmCredit Watch by email or to manage your subscription, visit ABA Email Bulletins at www.aba. com/Members/Ebulletins/Pages/default.aspx and check or uncheck the appropriate boxes. For other inquiries, please contact Barbara McCoy at the ABA at 1-800-BANKERS or bmccoy@aba.com . innovative Nebraska banks provide innovative financial solutions to the communities they serve. We are here to enhance your success. Loan Origination and Workout Loan Participations Bank Mergers and Acquisitions Succession Planning for Owners Commercial Litigation Regulatory Consultation and Compliance Loan Default Remedies and Bankruptcy Representation Real Estate Purchase, Sale and Leasing General Business Representation Lincoln Omaha Denver www.woodsaitken.com experience momentum BKD National Financial Services Group Are you moving with the current? The regulatory environment is always changing, and you can’t afford to tread water. BKD National Financial Services Group serves 1,200 financial institutions, and our advisors can assist with a wide variety of accounting, tax and consulting issues. Experience how our expertise can help you get ahead of the curve. 1200 cliEnTs lincoln // 402.473.7600 Omaha // 402.392.1040 bkd.com