Tax-advantaged FCS lender makes $725 million loan to Verizon in Vodafone buyout
Washington, D.C. (Oct. 22, 2013)—The Independent Community Bankers of America® (ICBA) yesterday expressed alarm that Farm Credit System (FCS) lender CoBank, a $90 billion bank for cooperatives, was significantly involved in a $12 billion loan to Verizon Communications to purchase Vodafone’s stake in Verizon Wireless. In a letter to the FCS’s regulator, the Farm Credit Administration (FCA), ICBA President and CEO Camden R. Fine noted that Verizon and Vodafone are multinational telecommunications firms, hardly candidates for tax-advantaged financing from a government-sponsored enterprise (GSE) that provides credit and other services to agricultural producers and farmer-owned cooperatives.
“On its face, CoBank’s involvement appears to be an effort to leverage their GSE status deeply into the realm of multi-national, non-agricultural, non-rural and non-cooperative corporate financial deals,” Fine wrote. “This is not the purpose for which CoBank was created as part of the Farm Credit System.”
In ICBA’s letter to the FCA, Fine noted that Securities and Exchange Commission documents show that CoBank is financing $725 million of the global telecom buyout, the largest amount of any lender. Vodafone, a multinational telecommunications company headquartered in London, is the world’s second-largest mobile telecommunications company in terms of revenues and subscribers. Verizon Communications, headquartered in New York City, recently 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 GSE’s implicit subsidies,” Fine said today. “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 for a major telecommunications industry buyout between large multi-national corporations located in two of the world’s largest cities is the latest example of unjustifiable mission creep and hardly represents a rural loan.”
The Independent Community Bankers of America®, the nation’s voice for nearly 7,000 community banks of all sizes and charter types, is dedicated exclusively to representing the interests of the community banking industry and its membership through effective advocacy, best-in-class education and high-quality products and services. For more information, visit www.icba.org.