CFC History

CFC was incorporated in 1969 as a non-profit financing cooperative charged with raising funds from the private capital markets to supplement REA lending programs.

As early as 1958, cooperative leaders began to publicly recognize the need for new sources of financing to supplement the lending programs of the Rural Electrification Administration (REA), which later became the Rural Utilities Service (RUS).

On August 1967, NRECA appointed the Long-Range Study Committee to devise a plan for meeting the cooperatives’ future financing needs.

• Kentucky Rural Electric Cooperative Corporation Manager J. K. Smith chaired the 27-member committee
• Members were selected because of their demonstrated leadership ability and professional qualifications but they did not act alone
• The committee actively solicited input from the cooperative community, and hundreds responded

On April 10, 1969, the National Rural Utilities Cooperative Finance Corporation (CFC) was incorporated as a private, non-profit, cooperative financing organization. CFC was charged with raising funds for its cooperative members from the capital markets. Smith was appointed the first governor and chief executive officer.

The CFC concept was unique because:

• The combined strength of CFC's member systems allowed the organization to issue financial securities and raise funds from the private money markets that most of its members could not access on their own
• REA agreed to share the mortgages it already held on its borrowers’ systems to provide security for CFC’s loan programs
• These mortgages on CFC member electric systems provided security for CFC collateral trust bonds. At the time, the concept of mortgage-backed securities was very new and untried in the non-governmental sector
• CFC members invested in Capital Term Certificates to provide the equity needed to raise funds in the private markets for the new organization

CFC approved its first short-term loan in December 1970 and its first two long-term loans in February 1971. It issued its first collateral trust bonds in December 1972.

The members of the Long-Range Study Committee planned well. In 2009, CFC celebrated its 40th year of service to the nation's electric cooperatives.