14

COLORADO’S FARM CREDIT SYSTEM
REPORT BY BERT ELY
The Farm Credit System:
Its operations nationally and in Colorado
PRODUCED IN PARTNERSHIP
EXECUTIVE SUMMARY
The Farm Credit System, the first government
sponsored enterprise (GSE), was created
almost a century ago to finance farm
mortgages that most commercial banks were
either barred by law from providing or were
too small to safely finance. Over time that
rationale faded away as commercial banks
grew in size and were empowered to finance
agricultural real estate.
Over the years Congress also granted the
FCS broader lending powers, enabling it to
become a nearly $300 billion behemoth,
larger than almost every bank in the United
States. Even though the FCS is no longer
needed, and certainly would not be created
today, it continues to grow as it pushes
further and further into non-agricultural
lending, including providing credit to large,
investor-owned enterprises hardly in need of
taxpayer-subsidized financing. The time has
come for Congress to rein in the FCS.
KEY HIGHLIGHTS
The FCS gets tax money to compete with
you – and that’s not its only advantage.
• If the FCS was a commercial banking
company, it would be the eighth-largest
banking company in the United States – and
it’s still subsidized by taxpayers
CBA STAFF
DON CHILDEARS
President/CEO
JENIFER WALLER
Senior Vice President
AMANDA AVERCH
Director of Communication
MIKE BINTNER
Director of Membership
LINDSAY MUNIZ
Executive Assistant
don@coloradobankers.org
jenifer@coloradobankers.org
averch@coloradobankers.org
mike@coloradobankers.org
lindsay@coloradobankers.org

• The profits it generates from its real estate
lending activities are exempt from all corporate
income taxes
• Profits from its non-real-estate lending
activities are generally exempt from state and
local income taxes
• Many states have exempted the FCS from lien
recordation fees and other fees and charges
associated with lending
• Combined, the FCS conservatively enjoyed a
$2.3 billion taxpayer subsidy in 2014 – a $1.07
billion interest subsidy (based on average debt
outstanding during 2014 of $214 billion) plus a
$1.2 billion income-tax subsidy
• As a GSE, the FCS can borrow at very
favorable interest rates – slightly higher than
rates at which the U.S. Treasury borrows and at
rates lower than what AAA-rated corporations
can borrow
The FCS is expanding its reach in Colorado –
at your expense.
• Total FCS lending in Colorado has grown in
recent years, from $3.61 billion December 31,
2012, to $3.92 billion at the end of 2013, and to
$4.89 billion at the end of 2014
1.88% at the end of 2012, to 1.95% at the end of
2013, and to 2.25% at December 31, 2014
• Even after adding in agricultural lending
in Colorado by banks headquartered outside
the state, the FCS clearly is the largest single
agricultural lender in Colorado and most likely
provides over half the agricultural credit for
Colorado farmers and ranchers
The FCS plays by its own rules – and there are
far fewer of them.
• FCS is exempt from the Dodd-Frank Act and
the Community Reinvestment Act
• FCS is exempt from laws governing the
issuance of debt securities
• FCS’ regulator, the Farm Credit
Administration (FCA) is not enforcing
congressionally imposed limitations on who the
FCS can lend to and for what purpose
• FCA sees its mission as being supportive of
the FCS - It is not unfair to characterize the
FCA as a “captured regulator,” in part because
over time many of the members of its board of
directors have come from FCS institutions
• FCS lending in Colorado, as a portion of total
FCS lending, has grown in recent years, from
QUESTIONS? PLEASE CONTACT US TODAY.
Colorado Bankers Association
One Sherman Place, 140 East 19th Avenue, Suite 400, Denver, CO 80203
P 303.825.1575 | info@coloradobankers.org