SIC 6111 Federal and Federally Sponsored Credit Agencies
SIC 6111
This classification includes establishments of the federal government and federally sponsored credit agencies primarily engaged in guaranteeing, insuring, or making loans. Federally sponsored credit agencies are established under authority of federal legislation but are not regarded as part of the government. They are often owned by their members or borrowers.
522293
International Trade Financing
522294
Secondary Market Financing
522298
All Other Non-Depository Credit Intermediation
The federal government created several organizations to provide services to communities where they otherwise would not be available or would not be affordable. It also created entities to encourage activities that are seen to be in the national interest. Most of these services are targeted at rural communities. Due to the sparse populations in these areas, as well as the instability of local income-producing enterprises, it is often not profitable for private firms to provide services such as credit and telephone services. In other cases, such as student loan financing, the government has an interest in promoting and encouraging the field's continued vibrancy.
Rural lending in particular is often affected by peripheral circumstances in the industry. The consolidation of banks in the later decades of the twentieth and beginning of the twenty-first century (7,598 commercial banks operated in the first quarter of 2005, down from 8,129 in 2002 and down dramatically from 18,769 at the end of 1975) tended to have a negative impact on rural lending, particularly as rural banks merged with larger urban banks. According to the Journal of Agricultural Lending, "larger regional institutions may not have the same expertise or motivation to reinvest in local production processes."
The organizations in this industry classification, while government sponsored, should not be strictly interpreted as government organizations. In fact, they are typically more private than public. The board and chief executive officer are typically appointed by the president of the United States, and its operations are nominally overseen by a cabinet-level secretary; however, the day-to-day operations of the organization are left to the staff. Furthermore, these agencies operate under the assumption that they are accountable for their continued financial well-being. The operational details of these organizations can vary greatly.
A wide variety of agencies are included under this classification. These agencies are described below.
The first U.S. banks for cooperatives were established in Massachusetts. A law was passed May 14, 1877, authorizing the establishment of cooperative savings fund and loan associations. These associations later became known as cooperative banks. Cooperative banking takes several forms: building and loan associations; credit unions; federal land bank associations; labor banks; savings and loan associations; and savings banks.
The Commodity Credit Corporation (CCC), originally incorporated in Delaware in 1933, was operated and managed in close affiliation with the Reconstruction Finance Corporation. In 1939, the CCC became part of the Department of Agriculture, and in 1948, the CCC became an agency of the United States under a permanent federal charter.
The amended charter authorized the CCC to support prices of agricultural commodities through loans, purchases, payments, and other operations; support production and marketing of agricultural commodities; procure agricultural commodities for sale to other government agencies, foreign governments, and domestic, foreign, or international relief or rehabilitation agencies; dispose of surplus agricultural commodities; and establish policies to increase domestic consumption of agricultural commodities through the development of new markets, marketing facilities, and uses.
The CCC normally uses the customary conventions and mechanisms of trade and commerce to pursue its purchasing and selling operations and in storing, transporting, processing, and handling commodities, which often entails contracting the use of plants and facilities. The CCC has authority to acquire equipment, as well as to rent or lease office space. The CCC is not allowed to acquire real property or any interests in real property except to protect its financial interests and to provide adequate storage facilities. Cold storage facilities may only be built or bought when Congress has approved money to do so.
The operations of the CCC are governed by the Food Security Act of 1985. This act extended CCC support of sugar beets and sugarcane and continued the soybean loan support program and quotas for peanuts. The Farm Act also authorized the CCC to offer commodity marketing loans to enhance U.S. competitiveness abroad, make rental payments to producers to move erodible land from production, intervene in dairy markets to support prices, and make payments to dairy producers to eliminate excess capacity. Finally, the act continued the previous "target price" system to augment commodity loans in supporting farm income and prices. "Target prices" form the basis on which agricultural subsidies are calculated. These subsidies, applied to wheat, feed grain, cotton, and rice producers who conform to specified standards and are eligible to receive subsidy payments are equal to the difference between the target price and the higher price of the market or the CCC loan value of the commodity.
To finance its activities, the CCC borrows from the U.S. Treasury, as well as from private lenders. The CCC is managed by a board of directors, which is chaired, ex officio, by the Secretary of Agriculture. The remainder of the board consists of six directors who are appointed by the president with the advice and consent of Congress. Not more than three of the directors may be of the same political party. The board is required to meet at the Secretary's convenience at least every 90 days.
The operations and activities of the CCC, which has no personnel or facilities, are administered by the Farm Service Agency, an organization within the U.S. Department of Agriculture. In the mid-2000s, the CCC had $30 billion in borrowing authority with the U.S. Treasury to fund its program.
The Export-Import Bank (Ex-Im Bank) was incorporated in 1934 under the laws of the District of Columbia. The receipts and disbursements of the bank were removed from the U.S. budget by the Export Expansion Finance Act of 1971. The Export-Import Bank Act, as amended by legislation in 1968, provides for a board of directors consisting of five members. The members, appointed by the president with the advice and consent of Congress, consist of the president of the Ex-Im Bank, who serves as the board's chairperson, the vice president, and three others. Of these, not more than three may be of the same party.
The primary objective of the bank is to aid in financing exports and imports as well as facilitating international trade and the exchange of commodities between the United States and foreign countries. The Export-Import Bank Act was designed to encourage the use of private capital for trade purposes but considers other factors in making loans not typically associated with corporate lending, including human rights considerations, adverse effects on U.S...
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