How Much Is FCS Underestimating Its Future Loan Losses?
By Bert Ely As bankers and other FCW readers know all too well, American agriculture…
Author Bert Ely
Bert Ely
Bert Ely is a consultant specializing in banking issues. He writes ABA's Farm Credit Watch.
Farm Credit Watch: Another Vacancy on the FCA Board Would Cripple It
By Bert Ely The FCA is administered by a three-member board of directors; the chairman…
Farm Credit Watch: Fitch Lowers FCS Debt Rating Outlook to Negative
By Bert Ely On Aug. 3, Fitch, one of the three major debt rating agencies,…
Farm Credit Watch: FCS Dramatically Boosted Its Liquidity During March
The FCS’s issuance of short-term securities, called discount notes, nearly doubled during the first quarter, rising by $17 billion between the end of 2019 and March 31, 2020. That increase accounted for 80 percent of the FCS’s first quarter rise in total system-wide debt outstanding.
ECORA Tax Relief Also Benefits Farms, Single-Family Rural Residences
Recent legislation introduced in both houses of Congress―the Enhancing Credit Opportunities in Rural America Act―would…
FCA Seeks Comments on Two Potentially Significant Regulatory Changes
In January, the Farm Credit Administration proposed two potentially significant regulations that could have mixed…
Resolving the Farm Credit System’s Growing Credit-Quality Problems
By Bert Ely American agriculture is experiencing extraordinary financial stress, unlike anything farmers and ranchers…
Restructuring the Farm Credit System—Why Now and How to Do It
The FCS, America’s least known government-sponsored-enterprise, has an excessively complex and increasingly obsolete organizational structure. … Simplifying the structure of the FCS would improve its operating efficiency, which presumably would benefit its member/borrowers, while strengthening the FCA’s safety-and-soundness regulation of the FCS.
Is the FCS Understating Its Emerging Credit-Quality Issues?
As bankers know all too well, farmers and ranchers are suffering from a sustained period of low commodity prices, rising input costs, heavy rains and flooding, and more recently, trade issues that are harming agricultural exports. Not surprising, those factors have hurt farm income, which peaked in 2013. As in past cycles, sustained declines in farm income lead to increased cash-flow problems for farmers and ranchers, which in turn lead to rising credit-quality problems for ag lenders. Even though the FCS focuses on lending to financially stronger farmers, a key question is how well the FCS is acknowledging growing credit-quality problems in its loan portfolio and/or shedding weaker credits by calling loans and not renewing lines of credit.
Northwest FCS Lends Outside Its Territory
A recent Farm Credit System loan for $2 million to finance a new Exxon gas station and convenience store in Sheridan, Wy., is almost certainly another example of an FCS lending abuse. This gas station is located at an Interstate highway interchange in a city with a population of about 18,000. While some farmers and ranchers may patronize the gas station and store, they are more likely gas up at a nearby farm co-op store.