Posted October 25, 2013
The Independent Community Bankers of America (ICBA) expressed concern that Farm Credit System (FCS) lender CoBank, a $90 billion bank for cooperatives, was significantly involved in a $12 billion loan to Verizon Communications, according to an ICBA news release available here.
The loan from CoBank allowed Verizon Wireless to purchase Vodafone’s stake in the company. ICBA wrote a letter to the Farm Credit Administration (FCA), FCS’s regulator, highlighting the fact that Verizon and Vodafone are multinational telecommunications firms, not candidates for tax-advantaged financing from a government-sponsored enterprise (GSE) which provides credit and other services to agricultural producers and cooperatives. The letter is available here.
Camden R. Fine, IBCA President and CEO, said “On its face, CoBank’s involvement appears to be an effort to leverage their GSE status deeply into the realm of multi-national, non-agricultural, non-rural and non-cooperative corporate financial deals. This is not the purpose for which Cobank was created as part of Farm Credit System.” Fine continued, “This is clearly a breach of FCS lending authority and a misuse of taxpayer-backed GSE’s implicit subsidies.”
In response, CoBank sent a statement to the Denver Business Journal, available here. CoBank said, “As part of CoBank’s mission to support infrastructure in rural communities we provide credit to a wide variety of rural communications companies, including voice, internet, cable, wireless and data service providers. Our borrowers include small, medium and large-sized businesses. The communications landscape continues to evolve rapidly, and there is a great deal of interdependence among companies to deliver modern communications services to rural communities.”
Farm Credit System (FCS) is a network of federally-chartered, privately-owned banks and associations that provide short-term and long-term loans to eligible agricultural producers and their cooperatives. The FCS is organized as a cooperative and is supervised and regulated by the Farm Credit Administration (FCA). The FCA is not an agency within USDA, but rather an agency within the executive branch of the federal government.
For more information on the FCS, FCA, or agricultural finance and credit, please visit the National Agricultural Law Center’s website here.
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