Frequently Asked Questions

Click on a category below for FAQs on the respective topic.

The Basics How FCSIC insurance works The Farm Credit System The Insurance Fund Premiums FCSIC operations Troubled System Institutions

The Basics

What is FCSIC?

The Farm Credit System Insurance Corporation — or FCSIC — was created by Congress to insure the timely payment of principal and interest on debt securities jointly issued by the Farm Credit System (FCS) banks (often referred to as “Systemwide bonds”). If a Farm Credit bank is unable to make a payment to investors on an insured debt security, FCSIC will pay investors out of its Insurance Fund. FCSIC is an independent entity within the United States government and is organized as a government-controlled corporation.

What does FCSIC insure?

FCSIC insures repayment of debt obligations jointly issued to investors by the four Farm Credit System banks. These “Systemwide bonds” are issued through the banks’ agent, the Federal Farm Credit Banks Funding Corporation, and are the primary source of funds used by Farm Credit System institutions. FCSIC does not insure anything else.

FCSIC insurance is limited to the amounts that we have in our insurance fund. If losses exceed what’s available in the Farm Credit Insurance Fund, then the assets of the remaining FCS banks will be called upon to pay the insured bonds.

Why was FCSIC created?

FCSIC was created by Congress as part of the sweeping reforms contained in the 1987 Agricultural Credit Act — that also authorized the issuance of up to $4 billion in U.S. government guaranteed bonds — to address the Farm Credit System financial crisis. Congress used the Federal Deposit Insurance Corporation (FDIC) as the basic model for FCSIC and created FCSIC for reasons similar to FDIC’s creation in the 1930s: to provide confidence and stability in an important financial system.

How does FCSIC protect investors in agriculture?

Investors, by purchasing bonds jointly issued by the FCS banks, provide the funds that the Farm Credit System lends to agriculture and rural America. FCSIC’s insurance of those bonds protects investors through sound administration of the Farm Credit Insurance Fund, ensuring that funds are available and employed to fulfill FCSIC's primary purpose.

Who benefits from FCSIC insurance?

The direct beneficiaries are investors in Farm Credit System debt obligations who would receive payment from the Farm Credit Insurance Fund in the event of default. Taxpayers benefit from the Farm Credit Insurance Fund by, among other ways, having a pool of available funds that would be used to support the Farm Credit System before the need to use any appropriated taxpayer money. Farm Credit banks and their affiliated associations benefit because the FCSIC government insurance program provides assurances to private investors and therefore enhances the FCS banks’ access to markets and their ability to borrow at very favorable rates.

Does FCSIC insure or support Farmer Mac?

No. FCSIC does not insure any obligations of the Federal Agricultural Mortgage Corporation (Farmer Mac) and Congress specifically prohibited FCSIC from using its Insurance Fund to provide any assistance or support to Farmer Mac. However, if requested by the Farm Credit Administration (FCA), we can act as receiver or conservator for Farmer Mac (without using money in our Insurance Fund).

What are FCSIC’s specific statutory authorities?

• Make payments to bondholders when necessary to insure the timely payment of “Systemwide” debt jointly issued by system banks.
• Maintain the Farm Credit Insurance Fund.
• Assess and collect premiums.
• Serve as receiver or conservator of a System institution when appointed by FCA.
• Provide discretionary financial assistance to a System institution.
• Examine System institutions (normally executed through FCA examiners and not duplicative of FCA activities).
• Regulate “golden parachute” payments made by troubled System institutions.
• Ensure the retirement of “eligible borrower stock” (issued pre-1988) at par value.