Farm Credit System:

Analysis and Comment on Possible New Insurance Corporation Powers

GGD-96-144: Published: Aug 5, 1996. Publicly Released: Aug 5, 1996.

Additional Materials:


Thomas J. McCool
(202) 512-8678


Office of Public Affairs
(202) 512-4800

Pursuant to a legislative requirement, GAO reviewed the appropriateness and major advantages of three proposals to increase the Farm Credit System Insurance Corporation's (FCSIC) oversight powers over its Insurance Fund.

GAO found that: (1) authorizing FCSIC to assess association capital would provide short-term additional protection to the Insurance Fund, investors, and taxpayers, but reasons for increased FCSIC power have diminished and granting this authority could destabilize the Fund if the authority were used during a period of financial stress; (2) the Farm Credit Administration (FCA) needs to set adequate capital standards for system banks and supervise and resolve any threats to the Fund; (3) FCA has not demonstrated that giving FCSIC supplemental premium authority is needed; (4) giving FCSIC supplemental premium authority could reduce the system's ability to compete, increase its instability, and reduce banks' ability to pay supplemental premiums; (5) if the system avoids major losses, it should reach a secure base amount and continue to grow gradually through investment income; (6) authorizing FCSIC to charge higher premiums to banks that are most at risk could create additional incentives for banks to manage risk prudently and complement FCA risk-based capital requirements; and (7) FCSIC should be required to pay interest on the $260 million used to start up the Fund, since this interest represents a continuing subsidy.

Matter for Congressional Consideration

  1. Status: Closed - Not Implemented

    Comments: No action has been taken at this time.

    Matter: While FCSIC should continue to be required to repay the entire amount of government funds, until this occurs, Congress should require FCSIC to pay interest to the government on the unpaid balance of the original $260 million that was transferred to it in 1989.


Explore the full database of GAO's Open Recommendations »

Jul 29, 2020

Jul 8, 2020

Jun 22, 2020

May 26, 2020

May 12, 2020

May 6, 2020

Mar 27, 2020

Feb 3, 2020

Jan 29, 2020

Looking for more? Browse all our products here