Pub. 9 2014-2015 Issue 6

March/April 2015 27 Extraordinary Service for Extraordinary Members. nately, the FCA, as it has with many other issues, has chosen to ignore this illegal rebating. On the issue of retainedmineral rights arising from farmland foreclosures, the FCS is far from transparent about the value of those rights or why the FCS should not be required to sell them. FCA Will Bury an Embarrassment Through a Shotgun Merger The November Farm Credit Watch reported on an ac- counting scandal that had just erupted at Farm Credit Ser- vices Southwest, the FCS association serving most of Arizona plus California’s Imperial Valley. This scandal stems from the discovery during the third quarter of 2014 of “a sudden significant increase in the level of delinquent loans affecting an identifiable portion of the associa- tion’s loan portfolio.” Consequently, the FCS Southwest directors reported in an Oct. 10, 2014, letter to the association’s borrower/stockholders that the associa- tion’s financial statements issued since 2009 “can no longer be relied upon. Accordingly, the association expects to restate such financial statements.” So far, restated financial statements have not yet been issued. On a parallel track, the FCA removed the links on its website to all call reports FCS Southwest filed after 2009. Those links have not been restored. Today, FCS Southwest is an accounting black hole. On Feb. 2, FCS Southwest announced it had “entered into a letter of intent to merge with Farm Credit West,” the fifth- largest FCS association. Farm Credit West serves portions of California and Nevada. According to the FCS Southwest letter, “over the next couple of months, both associations will be undertaking due diligence to more closely assess the potential benefits of a merger to their respective shareholders and to finalize the terms of a merger agreement,” with an anticipated “effective date for the merger of Aug. 1, 2015.” Eleven days lat- er, on Feb. 13, FCS Southwest informed its borrowers/stockholders that Farm Credit West’s CEO also was now serving as FCS Southwest’s CEO. Clearly, severe management and financial problems ex- ist at FCS Southwest. One wonders how the borrowers/stockholders of either association can intelligently vote on the proposed merger given all the financial unknowns. Once again a troubled FCS association will be buried through an FCA-sanctionedmerger with another association. This shotgun merger must be seen as a supervisory failure of both the FCA and CoBank, FCS Southwest’s funding bank. FCS Delays Publishing Year-End Financial Results Perhaps because of the financial-reporting problems at FCS Southwest or possibly due to accounting issues elsewhere within the FCS, the FCS will be publishing its 2014 financial results almost three weeks later than normal. According to the website for the Federal FarmCredit Banks Funding Corp. we’re Always CLOSE BY NetWorks is the Electronic Funds Transfer (EFT) service provider that Nebraskans have used and learned to trust like family for over 30 years. Since our offices are right here in Nebraska, you can count on us to provide quick and personalized service for all of your EFT needs. Give us a call and let’s talk about how we can simplify EFT for you. You will talk with a fellow Nebraskan and not some automated system. www.netseft.com Toll Free 800-735-6833 Local 402-434-8202  Bert Ely — continued on page 29