Randy D. Renth, board director for Clinton County Electric Cooperative
Still funding the future
CFC lends strength to the cooperative structure
Although some have declared that the recent “Great Recession” – the worst our country has seen since the Great Depression – has come to an end, its impact still resonates across the country and here in Illinois. The unemployment rate in the state was 9.8 percent in October, similar to 9.6 percent for the nation as a whole. Though the rate has inched down from 10.9 percent a year ago, far too many have fallen on hard times.
Access to cash, for individuals and businesses alike, is more limited than it has been in many years. The Federal Deposit Insurance Corporation, which tracks bank failures, reports that more than 340 banks have failed over the past decade, almost 12 percent based here in Illinois. Yet electric cooperatives, which supply the reliable, affordable electricity that drives our economy, must continue to serve their members and keep the lights on.
Keeping electric generation, transmission and distribution infrastructure well-maintained takes quite a bit of funding but the electric cooperatives of Illinois and 46 other states across the country have a partner to turn to in good times and bad. The National Rural Utilities Cooperative Finance Corporation, or CFC for short, is a trusted ally – a co-op for co-ops that serves 28 electric cooperative organizations in Illinois. CFC is a finance cooperative that was established more than 40 years ago to provide funding to electric cooperatives.
I have served on the CFC Board of Directors for over two years, and I continue to be proud of the job it does in serving its cooperative members. Throughout its history, CFC has been ready and able to provide the funds electric cooperatives need to operate, grow and power rural America even when access to capital is tight. CFC has its roots in the late 1960s, when a group of visionary leaders realized that access to affordable financing could only be assured by a new kind of organization owned and controlled by electric cooperatives.
On April 10, 1969, CFC was incorporated, and J.K. Smith, then general manager of the Kentucky Association of Electric Cooperatives, stepped into the role as CFC’s governor. He would guide the organization through its first 10 years of growth, from its first bond sale to 1979, when the organization’s total loans outstanding surpassed $1 billion for the first time.
From there CFC grew at a fast clip. By 1980 membership had grown to 913 electric co-op systems, and the organization had made more than $2 billion in loans. In 1981 CFC created the National Cooperative Services Corporation as an affiliate organization that could provide specialized financing services for electric co-ops and six years later a second affiliate was created – the Rural Telephone Finance Corporation-whose purpose was to provide financial services to rural telephone systems.
CFC has continued to evolve and adapt to the times we are in. At the end of its last fiscal year, on May 31, 2010, the organization had more than $20 billion in loans and guarantees outstanding – that’s $20 billion, which has financed everything from power plants that generate reliable electricity to the meters installed on your home.
Financial strength in a lender is of the utmost importance. Equally important is having access to low interest rates. Historically, those have been two crucial attributes of good lenders. However, CFC recognizes changes impacting the electric industry and our nation today requires more than just that. For this reason, the organization continues to evolve, diversifying its assets and offering new tools to support and ensure the financial success of its member cooperatives.
CFC is not a government-backed entity nor is it an investment bank, commercial bank or credit union. It does not deal in mortgage-backed securities, credit default swaps or risky derivatives — unlike other financial lenders.
CFC is an independent, non-government finance company owned and governed by electric co-ops. It is a patient lender, with a long-term perspective that focuses on what is best for its members and the consumers they serve. In this sense CFC is very different from most banks and financial institutions. I am proud of the work we are doing at CFC. You, as a member of an electric cooperative, can rest assured that CFC will help keep the lights on for generations to come.
Randy D. Renth in addition to being a CPA farms near Mascoutah, is a CFO for Rehkemper & Son in St. Rose, and serves as a board director for Clinton County Electric Cooperative and National Rural Utilities Cooperative Finance Corporation.