ensure the safety and soundness of institutions," FCS institutions are "to notify the appropriate Federal
authorities when any known or suspected Federal criminal violations . . . involving the assets, operations, or
affairs of an [FCS] institution . . . are discovered" The FCA provides a criminal referral form on its website.
While the FCA examination manual provides some guidance to examiners on assessing an FCS institution's
compliance with the criminal referral regulation, it does not appear to require the rigor of the BSA
examinations to which banks are subject. Of course, if the FCA did issue an enforcement order penalizing an
FCS institution for not making a criminal referral or not properly monitoring its transactions in order to
detect money laundering or other BSA-like violations, the public would never know about it because of the
FCA's longstanding policy of not publicizing its enforcement actions, a policy I have criticized on numerous
occasions.
New FCA director has been nominated
On September 12, President Trump nominated Glen R. Smith of Atlantic, Iowa, to fill a vacancy on the
FCA's three-member board of directors. If confirmed by the Senate, Smith would serve for the rest of a term
ending on May 21, 2022, a board seat last occupied by the late Kenneth Spearman. Smith is the president and
co-owner of Smith Land Service, a company he found in 1982; it specializes in farm management, land
appraisal, and farmland brokerage services. Smith also owns and serves as president of a family farm
operation that encompasses about 2,000 acres of mainly corn and soybeans in western Iowa. Smith graduated
from Iowa State University in 1979 with a B.S. in agricultural business. There is no indication from readily
available biographic materials if Smith has ever been an FCS borrower or if, as a borrower, he has been
active in FCS affairs or served as an officer or director of an FCS institution. Iowa is served by FCS of
America, the FCS's largest association. If Smith is confirmed, it will be interesting to see if he makes any
waves at the FCA.
FCA updates mission compliance examination procedures
On September 7, the FCA issued an update to the Mission Compliance section of its Examination Manual.
Bankers have long complained, with substantial justification, that the FCS lends outside of its
congressionally-mandated mission. There is some sound guidance in this section of the manual ("know its
customer base and agricultural marketplace" and have "a marketing plan") and lots of "do's." However, the
Examination Procedures and Guidance related to Mission Compliance leave much to be desired. In
particular, this guidance is sorely lacking in "don'ts," i.e., the types of loans the Farm Credit Act bars the
FCS from making, such as lending to large, investor-owned utilities or financing hunting lodges and fishing
camps that although rural in nature, have nothing to do with production agriculture, farm-related service
businesses, or agricultural processing or marketing operations. While noting that the FCS finances rural
homes, the guidance does not warn that FSC home loans must only be for moderately priced homes in rural
areas or towns of less than 2,500 and must be the borrower's principal residence -- loans on rural mansions,
even a principal residence, are verboten. The discussion on YBS (young, beginning, and small) lending fails
to differentiate, for example, lending to genuine young (under 35) farmers just getting started from loans to
young Silicon Valley millionaires seeking cheap financing for a country estate on which they plan to run a
few cows or grow some trees.

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