Bert Ely's FARM CREDIT WATCH®
Shedding Light on the Farm Credit System, America's Least Known GSE
©2017 Bert Ely
To contact Bert Ely: Email: bert@ely-co.com; Fax: 703-836-1403; Phone: 703-836-4101
Mail: P.O. Box 320700, Alexandria, Virginia 22320
October 2017 (No. 235)
The four FCS banks are commercial banks???
According to a recent press release issued by the on-line magazine Global Finance, the four FCS banks
are among the world's 50 safest commercial banks. AgriBank was ranked #19, CoBank #25, AgFirst
#28, and Farm Credit Bank of Texas #30. The press release stated that the banks on its list of the safest
commercial banks "were selected through an evaluation of long-term foreign currency ratings -- from
Moody's, Standard & Poor's, and Fitch." Apart from their equity capital, the FCS banks are almost
entirely funded with debt issued by the Federal Farm Credit Banks Funding Corporation and are jointly
and severally liable for that debt. Global Finance, though, did not acknowledge that fact nor the fact that
the four FCS banks are GSEs implicitly backed by the federal government, they also are the beneficiaries
of a $10 billion cost-free line-of-credit from the U.S. Treasury. Five U.S. bank holding companies also
made the top-50 list -- U.S. Bancorp (21), BNY Mellon (40), State Street (43), Northern Trust (44), and
Wells Fargo (49).
It is absolutely appalling that Global Finance fails to understand that the FCS banks are not commercial
banks, but worse, when I pointed out that rather obvious fact to the editors at Global Finance, they would
not acknowledge it. More troubling, when CoBank touted its inclusion the list of Global Finance's 50
safest banks in this news release, it failed to note that its outstanding debt is raised for it by the Funding
Corporation and that it was erroneously included in Global Finance's companion list of the world's safest
commercial banks. CoBank's failure to publicly state it should not be characterized as a commercial bank
is a tacit admission that it does not mind being viewed by Global Finance's readers as a commercial bank.
Worse, for at least the last six years, CoBank news releases have cited it as being ranked by Global
Finance as one of the world's safest banks without pointing out the magazine's error in characterizing it a
commercial bank. If CoBank has no objection to repeatedly being called a commercial bank, then it
should be regulated as if it were a commercial bank.
Trying to set the record straight, I emailed the editors at Global Finance to explain that the FCS banks are
not commercial banks and that they are largely funded by the unranked Funding Corporation. On
September 29, Andrea Fiano, Global Finance's editor, emailed a substantive reply, but he failed to
address my central complaint -- the magazine's characterization of the FCS banks as commercial banks
when they clearly are not. Worse, on October 6, Global Finance published a list of the "Safest 25
Commercial Banks In The World," which is merely the top 25 banks from its earlier list of the 50 safest
commercial banks. Accordingly, this list included AgriBank and CoBank. So far Fiano has failed to
respond to a follow-up query as to why Global Finance continues to call the FCS banks commercial
banks. Hopefully, Global Finance will soon drop the FCS banks from its list of the safest commercial
banks.
The FCS's regulator, the Farm Credit Administration (FCA), should object to any mischaracterization of
any FCS institution, if for no other reason than to protect its regulatory turf, for if a widespread belief

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