Farm Credit Watch: Time for Fully Transparent FCA Board Meetings

By Bert Ely

One essential element of democratic, accountable government is transparency—other than in matters of national security, government decision-making processes must be an open book to the public. To enhance transparency, governments at all levels in the United States have enacted government-in-the-sunshine and freedom-of-information laws.

An important element of these laws is that meetings of government bodies—elected legislatures as well as subordinate regulatory agencies—must be open to the public, unless they are closed for very specific reasons authorized by law, such as to discuss personnel matters and pending litigation. Even then, final action on any matter discussed behind closed doors must be voted on in a public meeting.

While the pandemic has greatly affected the manner in which public bodies, including the boards of federal regulatory agencies, meet to discuss and take action, the essence of open-meeting laws has not changed, and virtual meetings have taken the place of in-person meetings, which usually were held at the regulatory agency.

An inescapable element of government openness is that members of the public should be able to observe the public portion of a government meeting without having to identify themselves to the agency holding the meeting unless they wish to participate in the meeting, such as speaking to the body or otherwise advocating before it.

To require attendees at an in-person or virtual meeting of a public body to register as an attendee represents a deliberate attempt by the regulatory body to discourage the monitoring of its actions. In effect, registration requirements actively discourage public monitoring of a regulatory body’s deliberations and the interactions between the governing board of that body and its employees and members of the public. Put another way, citizens should not have to identify themselves in order to monitor the activities of their government.

Among the financial regulatory bodies I recently surveyed, only the board of directors of the Farm Credit Administration requires members of the public to register to attend a virtual meeting of the FCA board. This current registration requirement is a carryover from the days when pre-registration was required to attend an in-person meeting of the FCA board.

The other federal financial regulators that do not require any form of registration to observe a virtual meeting on-line are the Board of Governors of the Federal Reserve System, the Board of Directors of the FDIC, the Board of Directors of the National Credit Union Administration, the Securities and Exchange Commission, and the Commodities Futures Trading Commission.

In addition to the public portion of these agencies’ meetings being open without restriction or pre-registration, shortly after their board or commission meeting adjourns, a video of the meeting is posted online where it can be viewed anonymously by anyone. The FCA is the exception, as FCA staff have made the dubious assertion that the FCA does not retain a video of its board meetings, therefore it has nothing to post online.

Given that the cost of making and posting a video online is next to nothing, if at all measurable, there is absolutely no reason why the FCA cannot follow the practice of its fellow regulators and promptly post videos of the open portion of its board meetings online. Members of the public, including FCS and FCA employees, can then view these videos without having to identify themselves.

That members of the public—including bankers as well as FCA and FCS employees and directors of FCS associations—cannot anonymously view FCA board meetings reinforces the longstanding perception that the FCA is a private club intent on serving the interests of the FCS and its supplicants rather than the public.

Requiring anyone who wishes to observe an FCA board meeting for whatever reason to identify themselves to the FCA or having their name disclosed to other attendees at a virtual meeting of the FCA board deliberately discourages the public monitoring of the FCA’s activities. Neither the FCA nor any other attendee at a virtual meeting of the FCA needs to know who is watching the meeting!

The FCA would take a major step towards undermining the notion that it exists to serve the FCS rather than the public by permitting anonymous public viewing of its board meetings, whether virtual or in-person. Members of the House and Senate Agriculture Committees, which meet in public and without any registration requirement, should ask FCA board members why they cannot follow the openness practices of the other financial regulators.

CoBank has transparency issues, too

As taxpayer-subsidized GSEs, financial transparency is vital for every FCS bank and association. It is especially important at CoBank, the largest of the FCS’ four regional banks. Additionally, CoBank is the FCS’ most diverse lender, lending to cooperatively owned agribusinesses and rural utilities, as well as serving as the funding source for 20 FCS associations. It also has issued $1.5 billion of preferred stock to investors. Every March, CoBank holds an earnings conference call during which its management discusses CoBank’s previous-year financial results. Holding such a call is laudable, but this year, CoBank posted its 182-page 2020 annual report and financial statements on its website just one day before its earnings conference call.

One day does not give its member-borrowers, its preferred-stock investors and other analysts sufficient time to analyze the report and CoBank’s finances so that they can pose well-grounded questions to CoBank’s management. CoBank also requires prospective questioners to identify themselves, which gives management the opportunity to ignore questions they do not like, such as a question about who replaced a senior executive who retired last year. CoBank does, though, do something the FCA should emulate—it posts a recording of the call on its website so that interested parties can listen to the call and view the presentation slides at a later date. If CoBank can do that, so too should the FCA.

AEI report flags important agricultural policy issues

The American Enterprise Institute—an important Washington think tank with conservative leanings—recently issued a report, “Wither Agricultural Policy in 2021 and Beyond” that ag bankers should read in light of the change in administrations, the rapidly changing character of the ag sector, and the likely effects of those changes on the next Farm Bill. The following is a summary of the report:

  • The U.S. farm sector is currently in a strong financial position compared to the rest of the economy and can expect higher commodity prices in 2021. Claims that the sector is facing a serious financial crisis and needs more government subsidies are overblown.
  • To the extent that the sector is provided with increased subsidies, income transfer policies should be non-distortionary and encourage more efficient markets, rather than distorting production and marketing decisions.
  • Federal agricultural policies should focus on providing public goods and addressing market failures that lead to underinvestment in research and development (R&D) and higher levels of pollution, including greenhouse gas emissions.
  • The Biden administration should build on campaign promises to address these issues by supporting policy initiatives that mitigate climate change impacts, increase public investments in R&D, and promote more open trade policies that benefit agricultural exports.

Ag bankers will find this report and its many charts and tables a valuable guide to the forthcoming agricultural policy debates in Congress.


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