Early this week, the Independent Community Bankers of America sent a letter of protest to the Farm Credit Administration, alarmed that Farm Credit System lender CoBank gave a $725 million loan to Verizon Communications. It was part of a $12 billion loan to Verizon to buyout Vodafone's stake in Verizon Wireless.
ICBA President and CEO Camden Fine charged that Verizon and Vodafone are multinational telecommunications firms, hardly candidates for tax-advantaged cooperative serving agricultural producers and farmer-owned cooperatives. "On its face, CoBank's involvement appears to be an effort to leverage into the realm of multi-national, non-agricultural, non-rural and non-cooperative corporate financial deals. That isn't the purpose for which CoBank was created."
Fine noted that Securities and Exchange Commission documents show that CoBank is financing $725 million of the telecom buyout, the largest amount of any lender. Vodafone, a London-based multinational telecommunications company is the world's second-largest mobile telecommunications company. Verizon, headquartered in New York City, reported a third-quarter profit of $2.2 billion and revenues of more than $30 billion.
"This is a clear breach of FCS lending authority and a misuse of the taxpayer-backed subsidies," contended Fine. "The FCS has for years worked to expand its lending authority to use its government-sponsored subsidies to compete with rural community banks. This egregious loan . . . is the latest example of unjustifiable mission creep and hardly represents a rural loan."
CoBank released this statement in response: "As part of CoBank's mission to support infrastructure in rural communities, we provide credit to a wide variety of rural communications companies, including voice, Internet, cable, wireless and data service providers.
"Our borrowers include small, medium and large-sized businesses. The communications landscape continues to evolve rapidly, and there is a great deal of interdependence among companies to deliver modern communications services to rural communities. Everyone we loan to is eligible to borrow from CoBank under applicable law."