As Congress negotiates a final version of financial reform, one group of lenders has already won a blanket carve out from increased bank regulation — the more than 90 banks and associations of the Farm Credit System, a government-sponsored enterprise that dates back to 1916. The system, which has $30.8 billion in capital, includes about 90 agricultural credit associations that are cooperatively owned, plus five wholesale lending banks.
Rural farm lenders didn’t cause the subprime crisis, and their business practices are above board, says Ken Auer, president of the Farm Credit Council, an association that represents Farm Credit System interests. Auer is correct about the subprime crisis, but you’ll have to take his word for the system’s stellar business practices. When farm credit banks stray, the federal Farm Credit Administration, which regulates the system’s banks, knows how to keep a secret.
In May, the Center for Public Integrity filed a Freedom of Information Act (FOIA) request asking the Farm Credit Administration to release its database of formal enforcement actions against system banks, which would detail any violations of laws or unsafe banking practices acted on by the agency. The administration replied that 100 pages applied to the Center’s request, but refused to release the documents.
Unlike the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corp. — two other U.S. regulators which routinely release their enforcement actions against banks — the Farm Credit Administration is not required by statue to disclose enforcement actions, said Jane Virga, acting FOIA officer “We are not under that mandate based on the Farm Credit Act,” she said. In addition, Virga cited a FOIA exemption that she said “protects the security of financial institutions by withholding from the public reports that contain frank evaluations of an institution’s stability …”
The move lets Farm Credit System banks operate with less public scrutiny than other banks. Reminded of President Barack Obama’s promise to increase transparency at federal agencies, Virga suggested the Center appeal the agency’s ruling.
But John Blanchfield, senior vice president of agriculture and rural banking at the American Bankers Association, which represents banks that compete with farm credit lenders, has been pushing the issue for years. “You might as well call the planet Vulcan and ask for Dr. Spock,” he said.
ABOUT THE DATA
What: Farm Credit System bank enforcement actions
Where: Farm Credit Administration
Availability: Not available
Format: n/a
Usability: n/a
The Data Mine is a joint project of the Center for Public Integrity and the Sunlight Foundation.