FEBRUARY 25, 2010

The National Rural Utilities Cooperative Finance Corporation (CFC), a private not-for-profit cooperative created by America’s consumer-owned rural electric cooperatives, announced today that CoBank has agreed to a settlement relating to CFC’s discovery that for a period of years CoBank employees improperly accessed confidential and proprietary information from CFC’s password-protected, web-based “Extranet.”

In connection with the settlement, CoBank’s Chief Legal and Regulatory Officer, Mark Yonkman, stated: “CoBank acknowledges that for a period of years CoBank employees accessed confidential and proprietary information from a password-protected ‘Extranet’ of its competitor, CFC, without authorization from CFC. The settlement includes a monetary payment to CFC as well as non-monetary commitments, including an agreement not to engage in the challenged conduct in the future.”

CFC notified CoBank immediately upon discovery of the unauthorized access, and CoBank responded promptly.

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CoBank has consented to the issuance of this statement.

FEBRUARY 19, 2010

Industrial Production Increases

Industrial production in January was stronger than expected, with total production up 0.9 percent. This follows a 0.7-percent increase in the prior month and serves as another indicator that the economy is on its way to recovery. Strength was spread out across a number of industries but was driven by a 4.9-percent increase in auto manufacturing.

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FEBRUARY 19, 2010

J. E. “Gene” Smith, CEO of Choctawhatchee Electric Cooperative in Florida and former president of both the CFC and NCSC boards of directors, received the Clyde T. Ellis Award from NRECA for his service and dedication to the cooperative program.

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FEBRUARY 12, 2010

By Josh Silverman, CFC Director, Term Funding & Risk Management

The Federal Reserve’s latest senior loan officer survey revealed that U.S. banks were still tightening lending standards during Q4 2009, but at a less aggressive pace. Banks have not eased the stricter terms for home mortgages put in place during the financial crisis and are not expected to ease terms for the foreseeable future because lax lending conditions were one of the catalysts for the housing bubble. The survey also revealed that lending standards for commercial real estate loans tightened—an indication of pending problems in the sector.

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FEBRUARY 12, 2010

Employment Report Is Mixed

January’s employment report was a mixed bag, with non-farm payrolls unexpectedly declining by 20,000 and December’s payroll figures revised downward—increasing net job losses in that month to 150,000 from an originally reported 85,000. The unemployment rate, however, fell to 9.7 percent in January from 10 percent, even as the labor force participation rate increased slightly from 64.6 percent to 64.7 percent.

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FEBRUARY 12, 2010

RUS Issues Proposed Rule

Last week the Rural Utilities Service (RUS) published a proposed rule to amend regulations regarding the RUS-guaranteed underwriter program, which guarantees the loans made by cooperative and other not-for-profit lenders that make loans for eligible electric and telephone purposes. Fees paid by the lenders go to support the USDA Rural Economic Development Loan and Grant (REDL&G) program.

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FEBRUARY 12, 2010

Allegra Brigham, CEO and general manager of 4-County Electric Power Association in Columbus, Miss., has been named to serve on the board of directors for the Memphis Branch of the Federal Reserve Bank of St. Louis. As a board member she will work with directors from Mississippi, Tennessee and Arkansas to provide input on economic conditions in the area served by the Memphis Branch and will work on monetary policy issues.

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FEBRUARY 12, 2010

Regulated U.S. electric utilities face many challenging issues in 2010, including reduced demand for the second consecutive year, uncertainty about carbon regulation, shifting capital expenditure plans and numerous regulatory proceedings, according to a recent report from Standard & Poor’s (S&P). Below are some of S&P’s views about current issues affecting the industry.

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FEBRUARY 12, 2010

Despite severe weather conditions brought on by two winter storms that dumped four feet of snow on CFC headquarters in Northern Virginia over the past week, CFC maintained normal business hours and continued to serve its members from across the country.

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JANUARY 29, 2010

The National Institute of Standards and Technology (NIST) released the first part of its framework for creating standards that would ensure smart grid technologies are compatible with each other. The new report contains a conceptual reference model to facilitate design of an architecture for the smart grid, an initial set of 75 standards, priorities for additional standards to resolve important gaps, action plans under which organizations will address these priorities and an initial cyber security strategy and associated requirements. The report can be downloaded at www.nist.gov.

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