Page 66 - July-August 2018 GSE Report Flip Book

FARM CREDIT SYSTEM / FARMER MAC JJUALN. U- ARUYG. 22001188
Does the FCA need Dodd-Frank-like resolution powers? Another section of the Senate version of the Farm Bill not in the House version would greatly expand the powers of the Farm Credit System Insurance Corporation (FCSIC) to act as a conservator or receiver for any FCS institution. This provision accounts for about 10 percent of the total length of the Senate version of the Farm Bill. The Farm Credit Act already sets out, although not in great detail, the powers the FCA and FCSIC need in order to resolve an insolvent FCS institution. Whether the FCA requested this expansion of its resolution powers is not known, but given the length and legal complexity of the provision, the FCA most likely is its sponsor. If so, then the question is why now? Why is the FCA seeking these more extensive resolution powers, which are modeled in part on resolution provisions in the Dodd-Frank Act? Does the FCA see some looming financial problems within American agriculture that could lead to the failure of some FCS institutions, as occurred in the 1980s as a result of that decade’s ag crisis. Hopefully these questions will be addressed when a House-Senate conference committee resolves the differences between the two farm bills. (Farm Credit Watch, Bert Ely, July 2018)
The farm sector is under stress in a raising rate environment
Lower commodity prices, tariffs on agriculture products and rising interest rates are adversely
impacting farm income. As a result, the U.S. Departments of Agriculture projects lower farm
Farm income is projected to remain low in the
income through 2025.
U.S. FARM INCOME
coming years.
U.S. Farm Income
160
140
120
100
80 60 40 20
Billion Dollars (2018 $)
Billion Dollars (2018 $)
2013 Projections
2018 Projections
0
1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025
Source: USDA.
FEDERAL RESERVE BANK OF KANSAS CITY
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