The Farm Credit System

Once a government program starts...seems like it never stops.

From Wikipedia.com

The Farm Credit System is a federally chartered network of cooperatives and related service organizations that lends to agricultural producers, rural homeowners, farm-related businesses, and agricultural, aquatic, and public utility cooperatives in the United States. Federal oversight by the Farm Credit Administration is designed to provide for the safety and soundness of FCS institutions.

Farm Credit institutions are chartered by the federal government and must operate within limits established by the Farm Credit Act. Farm Credit is a government-sponsored enterprise.

AuthorizationCongress established FCS as a government sponsored enterprise when it enacted the Federal Farm Loan Act in 1916. Current authority is in the Farm Credit Act of 1971 (P.L. 92-181, as amended; 12 U.S.C. 1200 et seq.).

[edit] MissionIts mission is to provide a permanent, reliable source of credit to American farmers, ranchers, producers or harvesters of aquatic products, their cooperatives, and farm-related businesses. It does so by making appropriately structured loans to qualified individuals and businesses at competitive rates and providing financial services and advice to those persons and businesses.

Consistent with this of serving rural America, it also make loans for the purchase of rural homes, to finance rural communication, energy and water infrastructures, to support agricultural exports, and to finance other eligible entities.

[edit] Member farm credit banksFCS is composed of four regional Farm Credit Banks (FCB) and one Agricultural Credit Bank. These banks provide funds and support services to Federal Land Bank Associations (FLBA), Federal Land Credit Associations (FLCA), Production Credit Associations (PCA), and Agricultural Credit Associations (ACA). These associations in turn, provide loans to eligible borrowers. Lending associations are governed by boards of directors elected from FCS borrowers. Funds are raised through the sale of bonds and notes.

Five Member Farm Credit Banks:

AgFirst,
AgriBank,
CoBank,
Farm Credit Bank of Texas,
U.S. AgBank

From Reuters: U.S. ag lenders CoBank/U.S. AgBank merger moves ahead

(Reuters) - CoBank and U.S. AgBank, major lenders to U.S. agriculture and part of the government-sponsored Farm Credit System, said on Thursday their stockholders approved to merge the two banks.

Denver-based CoBank, with $66 billion in assets, and U.S. AgBank, headquartered in Wichita, Kansas with $25 billion in assets, proposed merger plans in December of 2010. Both are members of the Farm Credit System, a cooperative created by Congress in 1916 to provide credit to U.S. farmers.

The combined bank will do business under the CoBank name and provide financing to more than 70,000 farmers, ranchers and other rural borrowers through Farm Credit association banks in 23 states.

CoBank's president and CEO Robert Engel will become chief executive of the combined bank while Darryl Rhodes, U.S. AgBank CEO, will retire.

While regulations prohibit disclosure of vote tallies, "the stockholders of both organizations approved the merger by substantial majorities" during meetings held at the banks' headquarters on Wednesday, the banks said in statement.

Final merger approval is expected by the FCS's regulator, the Farm Credit Administration, following a 35-day reconsideration period. The administration granted preliminary approval in June.

The banks plan to merge on January 1, 2012, assuming FCA approves.

Additionally, CoBank on Thursday approved the bank to have up to $1.5 billion in preferred stock outstanding at any time, up from the previous limit of $1.0 billion.

The last time the bank increased its outstanding preferred stock was in July 2008 and has no current plans to issue additional preferred stock, it said.

"Any future issuances of third-party capital will be driven by the projected growth and capital needs of the bank as well as overall conditions in the capital markets," David Burlage, CoBank's CFO said.

There has been massive consolidation of FCS banks over the years, now down to four banks with the CoBank-US AgBank merger. Once there were some 37 regional banks lending to the system's association banks.