A government-backed organization founded a century ago to provide loans to farmers has recently exploded in size, branching out into massive transactions that go far beyond its original purpose, potentially putting taxpayers on the hook for a major bailout.

This rapid expansion has prompted calls for oversight from members of Congress and heightened fears that the Farm Credit System could be America's next Fannie Mae. Fannie Mae, the government-linked mortgage financier, collapsed when the housing bubble burst along with Freddie Mac, prompting a taxpayer bailout that reached $187.5 billion.

The FCS was created in 1916 as a tax-exempt and taxpayer backed organization to provide loans to farmers and rural communities. But it has since deviated from this narrow purpose, and assets have burgeoned to $283 billion, making it equal in size to the nation's ninth largest bank. This staggering number comes after a rapid 10 years of doubling FCS assets.

"Unfortunately, a too-big-to-fail approach has allowed this ... government-sponsored enterprise to overstep its purpose and crowd out private lenders," Rep. Marlin Stutzman, R-Ind., wrote in a May letter to the comptroller general at the Government Accountability Office. "Unless we return the Farm Credit System to its original mission, taxpayers could be on the hook for a bailout in the near future and farmers' access to credit could be reduced."

While the FCS began as a way to help hard-up rural areas, it has since expanded much past its mission to "recognize the System's commitment to [Young, Beginning and Small] farmers."

In 2013, Colorado CoBank, a branch of the Farm Credit System, issued a $725 million loan to Verizon Wireless and their Vodafone owner in London, claiming that it could legally make the loan because Verizon was a "similar entity" to a rural telephone company and was supplying some infrastructure to rural telecommunications.

The FCS also entered into a $350 million "credit agreement" with Frontier Communications Corporation to help finance a $2 billion acquisition from AT&T. The system was also part of $750 million dollar loan to restaurant chain Cracker Barrel in 2011.

"[C]ertain FCS lending institutions have utilized lending authority outside of their mission and intended purpose, put taxpayers at risk, compete[d] with private sector financial institutions in areas outside of agriculture and farm-relates businesses and distort[ed] the market," wrote Rep. Mick Mulvaney, R-S.C., in March to the CEO of the Farm Credit Administration, the regulator of the FCS. "I now question whether these loans exceed the authority granted under the Farm Credit Act."

On top of massive telecommunication loans, the FCS has funded other endeavors that also seem to sit far-afield of the organization's purview of supporting rural areas. A review of the Annual Information Statement from the Federal Farm Credit Banks Funding Corporation indicated that 51.3 percent of all FCS outstanding loans at the end of 2013 were in excess of one million dollars. Typical young, beginning or small farm loans have a median size of $250,000.

"We do have the authority and the responsibility to make rural infrastructure loans ... including electric and broadband systems," argued Kenneth Auer, CEO of the Farm Credit System, to the Washington Examiner. "There are a lot of other things that we finance other than farmers."

Congressman Mulvaney was not convinced.

"If these types of transactions continue, it will be incumbent on Congress to review the statutory authority of the FCS," he said. "We must determine if this use of taxpayer subsidies continues to serve its intended purpose."

In addition to the large, untoward loans, the FCS shares another startling resemblance to Fannie Mae and Freddie Mac: The country's taxpayers would be liable for any FCS economic trouble. This comes after the system opened a $10 billion line of credit with the Federal Financing Bank, a branch of the U.S. Treasury, in 2013. It is funded by taxpayer dollars.

"Treasury should tell taxpayers why the $10 billion was necessary," Stutzman wrote in an op-ed to the American Banker. "Hoosiers have a right to know if the Department of Treasury is at all concerned that the Farm Credit System Insurance Corporation has adequate funding,"

And taxpayers aren't the only ones the swelling FCS has put under pressure. Banks and other private-lending competitors are also feeling the squeeze of contending with the government giant.

This is because the FCS is backed by the government and is tax-exempt, paying only 4.5 percent in taxes, and can set loan rates a half to a whole percentage point below the rates offered by its private competitors. This noticeable disparity comes despite the fact that the 1986 Farm Credit Acts Amendment stated that "in no case is any borrower to be charged a rate of interest that is below competitive market rates for similar loans made by private lenders."

The rate discrepancy makes it difficult for American banks, which face a tax-rate of 29 percent, to compete for loans from farmers who are seeking the lowest interest rates.

"We openly accept any fair competition," Ed Elfmann, vice president of congressional relations at the American Bankers Association, told the Examiner. "Our banks are competing with with each other every day … We'll compete with everybody if it's a level playing field."

"Small rural banks are doing a great job of partnering with the USDA and Farmer Mac ... the [agricultural] economy is good and bankers are getting creative. They really want those loans," Elfmann said.

The ABA, the association that represents the nation's banking industry, added that while it does believe the system "has a place in agriculture," the government behemoth's recent actions indicate that the time is ripe for more FCS oversight.

"The regulator, the Farm Credit Administration, lets them do anything they want to do," said Elfmann. "If [the banking industry] had a bank that grew 100 billion dollars in 10 years, we would have a hearing on that ... but instead, [the FCS has] gone unchecked for about 15 years now. Every single year, all of [banking's] regulators come before Congress ...The FCS hasn't had one of those hearings in quite a while. We believe they are due."

Both Stutzman and the ABA point out that while loan-making industries similar to the FCS are subject to oversight by more than five federal committees, the FCS falls under the jurisdiction of only the House Committee on Agriculture.

Stutzman called for the comptroller general to discern how the FCS determines what competitive interest rates are and emphasized that the true cost to the taxpayer of the FCS must be determined.

The ABA has put forward solutions to Congress that include refocusing the FCS on only farm loans or just taxing the system should they exceed a certain loan limit. Other suggestions recommend that entities which give similar loans also have their income tax eliminated, encouraging a more even playing field.

"The looming bankruptcy of Medicare, Medicaid and Social Security, $18 trillion national debt ... everybody's just on this wonderful spending spree," Frank Keating, CEO of the American Bankers Association, told the Examiner. "To have a business enterprise pay no income tax is unsustainable."

Despite these calls for oversight, made by both Mulvaney and Stutzman, as well as the banking industry, so far no congressional progress has been made to stop the FCS's rapid growth and ensure that the system doesn't become the country's next Fannie Mae or Freddie Mac.