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Informational Memorandum
Subject:Responding to Local Financial Institution Failures
Date of Memorandum:06/10/2009
Expiration Date:
Signed By:Strom, Leland
FCA Contact Person:Stokke, Michael
Contact Phone:703-883-4067
List of Attachments:

Printer-friendly version => Strom Letter to FCS Boards 06-10-09.pdf

June 10, 2009

To: Board of Directors
Each Farm Credit System Institution

From: Leland A. Strom
Chairman and Chief Executive Officer

Subject: Responding to Local Financial Institution Failures

In previous communications, I emphasized that Farm Credit Administration (FCA) staff has stepped up its efforts to monitor and respond to events that may arise in the current environment. I also expressed my commitment to communicate with you on matters that are important to the continued success of your institution and the Farm Credit System (FCS or System) service to farmers, ranchers, and rural communities in a safe and sound manner. Accordingly, as we move through these challenging times, I think it is appropriate to address the impact of non-FCS local financial institution failures.

While the System remains safe and sound, failures of other local, state, and federally chartered financial institutions continue to increase. Some of you are currently dealing with these challenging circumstances and likely several more will in the near future. As you are aware, the impact of these failures is felt well beyond the immediate customers and owners of those institutions.

Local financial institutions are often active in agricultural lending. When these local institutions fail, farmers and ranchers can be left seeking new lenders to meet their ongoing credit needs. Increasingly, these situations are raising questions regarding the local impact on agriculture and the FCS. Therefore, I encourage System institutions to take the following actions when faced with these situations in the future:

I encourage FCS institutions to continue consistent, ongoing communications with the FCA. As I mentioned in previous communications, FCA will continue to support the System in fulfilling its mission, maintaining financial prudence, and providing strong governance of System institutions by boards of directors. FCA staff is available to respond to any questions regarding these situations. If you experience a failure of a financial institution in your chartered territory that affects eligible borrowers or the agricultural markets, please contact your assigned examiner-in-charge or Mike Stokke, Director, Office of Congressional and Public Affairs, at (703) 883-4056.

In closing, a local financial institution failure creates stress and difficult situations for the former customers of the institution and the local communities it served. In dealing with these circumstances, I ask for your careful consideration of the above items, which I believe are consistent with successfully accomplishing the System’s mission as a Government-sponsored enterprise.

Copy to: Chief Executive Officer
Each Farm Credit System Institution