Banks For Cooperatives

DEFINITION of 'Banks For Cooperatives'

Established by the Farm Credit Act of 1933, these regional, privately-owned and government-sponsored banks make loans to farmer-owned marketing, supply and service cooperatives, and rural utilities. The loans are financed primarily by the sale of debt securities issued by the Federal Farm Credit Bank. Banks for cooperatives are part of the Federal Farm Credit System and are subject to regulation by the Farm Credit Administration.

BREAKING DOWN 'Banks For Cooperatives'

The Federal Farm Credit System is a nationwide cooperative system of banks and associations providing credit to farmers, agricultural concerns and related businesses. This cooperative system contains the Bank for Cooperatives, Farm Credit Banks and the Federal Farm Credit Banks Funding Corp. In January 2006, the U.S. government signed a law stating that every farm credit district must have a bank for cooperatives.