America’s farmers deserve a sure thing, and taxpaying banks are ready and eager to finance rural broadband so that hardworking farmers across the nation have the tools they need to feed the world. But Mr. Engel’s unwritten assumption is that CoBank should be financing the large entities that would provide the critical access to broadband that so many farmers rely on. And CoBank certainly has a history of extending credit to telecommunications corporations – in the past few years CoBank has loaned $725 million to Verizon, $350 million to Frontier Communications, $225 million to US Cellular and $200 million to AT&T. And it seems that CoBank, busy wondering how it could extend these loans, forgot to ask whether it should extend these loans.
In December last year, the House Committee on Agriculture questioned CoBank’s regulator about CoBank’s $725 million loan to enable Verizon to acquire a stake in the European cellular company Vodafone. The defense offered for this outrageous breach of public trust was that the loan was permitted under the “similar entity” allowance, meaning that CoBank could extend the loan to Verizon because it was a similar entity to a rural telephone cooperative. Verizon, we can all agree, is not similar to a rural telephone cooperative.
If enacted, Mr. Engel’s proposal, though seemingly well-intentioned, would have an ancillary benefit – CoBank could retroactively justify its ill-considered prior loans and continue to extend inappropriate loans to Verizon, Frontier Communications, US Cellular and AT&T.
One thing is certain: America’s farmers need support and investment. But with this history of tweaking the rules to engage in lending far outside of its mission, can we be sure that CoBank’s primary aim will be to extend loans that will help farmers access broadband?
Leonard Wolfe, president and chief executive officer, United Bank & Trust, a $600 million community bank in Marysville, Kan.
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