NCPA - National Center for Policy Analysis

Government's Farmer Mac Has Become Honey Pot For Officers And Directors

April 29, 2002

Fourteen years ago, Congress set up an obscure little outfit it called the Federal Agricultural Mortgage Corporation, a.k.a. Farmer Mac, to offer farmers easier credit. Funded by government guarantees, its stock is traded on the New York Stock Exchange, and its officers have reaped a bonanza after they began to award themselves options starting in 1997.

  • The 31-employee outfit has 15 board members who sit atop average holdings valued at $816,249 -- and nine of the members have made millions selling more shares.
  • Its chief executive, Henry D. Edelman, last year hauled home salary and stock options valued at $1.8 million -- also controlling $27.6 million worth of Farmer Mac stock, even after selling $2.8 million worth last summer.
  • Moreover, Farmer Mac's financial health is somewhat dicey -- and it operates with the barest of financial cushions beyond standards set by regulators.
  • Farmer Mac -- with a $500 million market capitalization -- has an implied government guarantee of $1.5 billion.

Some 45 percent of its assets are in areas not related to its mission.

In 1998, when two-thirds of its assets had drifted into preferred stocks, bonds and other non-farm investments, the General Accounting Office criticized Farmer Mac in a report to Congress.

Source: Alison Leigh Cowan, "Big-City Paydays at Farmer Mac," New York Times, April 28, 2002.

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