Farm Credit System history

Congress responded with the Agricultural Credit Act of 1923, which added 13 Federal Intermediate Credit Banks (FICBs), including the FICB of Houston, to the Farm Credit System.

The stock market crash of 1929 touched off the Great Depression, which threw thousands of farmers into bankruptcy.

The Farm Credit Act of 1933 authorized local Production Credit Associations (PCAs) to be retail lenders and fund through the FICBs, expanding short- and intermediate-term agricultural credit availability.

FCA also played a pivotal role in the federal credit union movement, when in 1934 it was given responsibility for chartering, examining, and supervising all federal credit unions.

Before this oversight was turned over to the Federal Deposit Insurance Corporation in 1942, FCA had chartered more than 4,000 credit unions and examined them annually.

FCA becomes an independent agency again under the Farm Credit Act of 1953.

Robert B. Tootell is the first governor appointed by the board (in 1954).

All government capital to the FCS was repaid by 1968, making FCS institutions wholly owned by their farmer-borrowers.

Farm Credit Act of 1971 updated the System’s charter and expanded lending authority for leasing, records, taxes, consulting, crop insurance, as well as loans to fishermen and rural homeowners.

In 1980, the law was amended to encourage lending to young, beginning, and small farmers.

In 1985, in the midst of a deepening farm debt crisis characterized by low commodity prices, high farm debt-to-asset ratios, and steeply falling land values, the Farm Credit System banks held some $6 billion in loans in which the face amount exceeded the value of the collateral.

The Farm Credit Act of 1987 authorized and directed the merger of the FICB and FLB in each of the 12 Districts into 12 Farm Credit Banks (serving as wholesale lenders) as part of a financial assistance plan for the System.

In 1988, the Federal Land Bank and Federal Intermediate Credit Bank in Texas merged to form the present Farm Credit Bank of Texas.

Because of a 1992 US Supreme Court case, which held that fees and costs associated with a merger or acquisition were not deductible but had to be amortized over a lengthy time period, there would have been no offsetting deduction.

The Farm Credit System Reform Act of 1996 gave Farmer Mac further authority to purchase and pool loans and issue mortgage-backed securities with guaranteed payment of principal and interest, rather than just guarantee such securities issued by other retail lenders.

In 1998, the bank’s stockholders approved the transfer of direct mortgage lending authority from the bank to its affiliated Federal Land Bank Associations (FLBAs). These FLBAs in turn converted to direct lenders, called Federal Land Credit Associations.

Farm Credit Bank of Texas completed its first private preferred stock offering in 2003.

On July 17, 2016, the Farm Credit System celebrated its centennial.