The US Farm Credit System Bankrolls Verizon … a Farmer?
|November 27, 2013||Posted by Staff under Subsidies & Waste & Public Debt|
Verizon’s $725 million loan shows Farm Credit reform is needed.
This 2013 excerpt of USA Today, Nov 14, is by Jeff Plagge, president of Northwest Financial Corp, chairman of the American Bankers Association. This article first appeared in The Des Moines Register.
The federal Farm Credit System was created nearly 100 years ago at a time when affordable bank loans for farmers were hard to find. Today is a $250 billion financial institution; if it were a bank, it would be the ninth-largest in the country. Not only is its funding subsidized by government sponsorship, it also receives very generous tax breaks — all while competing directly with banks and other lenders that do not share these advantages.
It also makes loans to whomever it wants -— such as those buying land for recreational purposes: developers of golf courses and luxury residential neighborhoods.
Recently it loaned $725 million to Verizon Communications. The Farm Credit System joined with 45 banks from around the world to help Verizon purchase the 45% of Verizon Wireless it does not already own from British telecom giant Vodafone.
Why should taxpayers be subsidizing loans to a Dow 30 company with $116 billion in 2012 revenues? It will not fund construction of any rural wireless infrastructure; it merely funds a corporate buyout. Verizon is not a rural telephone cooperative; it is a stockholder-owned corporation.
Should the government continue to sponsor an enterprise as large and unfocused as today’s Farm Credit System?
Ed. Notes: The author, being a banker, has an axe to grind, since public lenders take business away from private lenders. That aside, the bigger issue is: these deals are the main business of government and always have been: to serve business. The out-of-pocket expense to the taxpayer (as a direct subsidy to the FCS) might not be so huge, but that’s not the point. The point is, the loans are to the biggies, not the littles. Government involvement in a business does not lower its prices to the public; that’s not even touched. And competition — which should lower prices and raise service — is not increased. No, it’s just another example of the role government plays in the real world as handmaiden to big business.
If you want it to stop, you have to stop letting politicians spend all your public revenue and must start spending it yourselves. That is, limit the government’s discretionary power of the purse to defending our rights; use the bulk of public revenue to fund a dividend to the citizenry in general.
Where would government get the money? From taxes, fees, dues, and leases on lands, resources, airwaves, and monopoly privileges like Verizon’s utility franchise. Charge the Verizons of the world full value for loans and guarantees; don’t give them such favors at little or no cost. Run government like a business in the most basic sense of the phrase.