An article yesterday in SNL Financial shone a spotlight on the Farm Credit System’s “dangerous and abused advantages” and the efforts of recently hired ABA SVP Steve Apodaca to highlight them publicly.
“The FCS is both unfairly competing with private lenders and expanding its activities well beyond farm country, potentially putting taxpayers at risk,” reporter Kevin Dobbs wrote in summarizing Apodaca’s point of view. As the FCS grows, “it is venturing outside of its expertise and if it runs into trouble it would put taxpayers on the hook to bail it out,” Dobbs continued.
The author also highlighted Apodaca’s personal experience as a banker attempting to compete with the FCS. “Apodaca said an FCS lender had no interest in a start-up farmer in need of a loan, which is the kind of farmer the system is supposed to support,” Dobbs said. “But after a bank financed that farmer’s operation and that farmer proved both successful and reliable in terms of paying down debt, the FCS then stepped in with a lower rate and stole that farmer’s business away from the bank. Apodaca said it is an example of the FCS’ widespread practice of cherry-picking pristine credits and leaving banks to grapple with the more challenging loans.”