[Analytical Perspectives]
[Special Analyses and Presentations]
[8. Underwriting Federal Credit and Insurance]
[From the U.S. Government Printing Office, www.gpo.gov]
In a period of tight budgetary constraints, the Administration has
been reexamining the role and design of Federal credit and insurance
programs. In many lines of credit and insurance, the private market can
meet societal demands and Federal intervention is unnecessary. However,
in some situations Federal intervention can improve the market outcome.
Last year, the ``Underwriting Federal Credit and Insurance'' chapter of
Analytical Perspectives focused on these rationales and their
application to particular credit and insurance programs.
This year, the chapter focuses on the next step in the analysis. Even
when Federal intervention can improve on market outcomes in principle,
it is necessary to judge whether the program is achieving these goals in
practice. Thus, the Administration is highlighting measurement of
program performance. What do these programs produce? What outcomes and
net impacts do they have on society?
Cost is also a performance measure. For credit and insurance programs,
it is a continuing challenge to understand and control the risks that
the Government assumes and to measure the inherent cost. This is
especially true in view of the rapid changes in financial markets and
increasingly complex financial instruments. Ultimately, performance is
measured by benefits (net impact) in relation to cost.
Budgetary constraints are also impinging on administrative resources
and program structure, pressing program managers to find more efficient
ways to originate, service, and collect on loans and monitor the
financial risks of guarantees and insurance. In some cases, staff is
diminishing despite rapidly growing portfolios. To address this problem,
improved financial systems are being implemented, and various forms of
private involvement are being explored.
I. Estimated Costs of Federal Credit and Insurance Programs
The Federal Government continues to be the largest creditor
institution in the United States, with $5.5 trillion outstanding at the
end of 1995. Of this, $163 billion is direct loans, $727 billion is loan
guarantees, and $4,613 billion is insurance. Including the Government-
sponsored enterprises (GSEs) pushes the total Federal and federally
assisted credit and insurance outstanding to $7.0 trillion.
Table 8-l presents the face value and estimated future costs of the
largest Federal credit and insurance programs and the Government-
sponsored enterprises. The face value of these programs is the total
amount of credit outstanding or the insurance in force. The future costs
of these programs is the amount by which payments from the Federal
Government to borrowers, guaranteed lenders, or insured parties exceeds
the repayments, fees, premiums, and other cash inflows to the
Government--whether by intent or in practice.\1\ The costs shown in this
table assume that program activity will continue following recent
trends.
\1\Under the Federal Credit Reform Act of 1990, the budget records as
an outlay the cost of a direct loan or loan guarantee when the loan is
disbursed. The cost is defined as the net present value of the estimated
cash outflows from the Government due to the loan or guarantee over its
life minus the present value of estimated cash inflows. Chapter 23 of
Analytical Perspectives, ``Budget System and Concepts and Glossary,''
explains concepts and terms used in credit budgeting.
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The amounts shown are not only costs or potential costs to taxpayers.
They are also the means by which these programs reallocate credit in the
economy toward purposes and entities or individuals favored under the
laws authorizing these programs and away from alternative uses. When the
Federal Government guarantees loans, for example to students or small
businesses, those borrowers move ahead of other borrowers in the credit
queue, because the Federal Government bears the risk of defaults on
their loans.
In volume, the fastest growth in Federal assistance is via Government-
sponsored enterprises. These privately owned, federally chartered
financial institutions are transforming mortgage markets; tapping
capital markets to assist agriculture, education, and housing; making
advances to depository institutions; lending for farming and rural
development; and insuring borrowing for educational institutions. Also
growing are loan guarantees and direct loans for home mortgages and
student assistance, and disaster insurance coverage.
Federal costs for credit and insurance programs generally declined
last year. Behind this improvement is the declining trend in long-term
interest rates in recent years as the Federal deficit was reduced, the
expectation that interest rates will continue to decline as the budget
moves closer to balance, and the economic growth and prosperity
documented in Chapter 2 of the Budget--Supplement, ``Three Years of
Progress.'' For credit programs, there has also been a widespread effort
to reduce subsidies, now that the Federal Credit Reform Act of 1990 has
raised awareness of them.
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Table 8-1. FACE VALUE AND ESTIMATED COST OF FEDERAL CREDIT AND INSURANCE PROGRAMS
(In billions of dollars)
----------------------------------------------------------------------------------------------------------------
1995 Budget Current
Estim. Estimates
Face Value Present Face Value Present
Program 1994 Value of 1995 Value of
Future Future
Costs\1\ Costs\1\
----------------------------------------------------------------------------------------------------------------
Direct Loans:\2\
Farm Service Agency (excluding CCC)................... 49 15-21 43 13-19
Rural Electrification Admin. and Rural Telephone Bank. 38 2-4 43 2-4
Agency for International Development.................. 14 0-1 14 2-3
Public Law 480........................................ 12 2-3 12 2-4
Disaster Assistance (SBA & FEMA)...................... N/A N/A 9 3-5
Foreign Military Financing............................ 8 0-1 8 0-1
Export-Import Bank.................................... 8 3-5 8 1-3
Federal Direct Student Loan Program................... * 11-15 3 6-9
Small Business Loans (SBA)............................ 9 2-3 2 0-1
Other Direct.......................................... 17 2-4 19 1-2
-------------------------------------------------------
Total Direct Loans.................................... 155 37-57 \2\161 30-51
Guaranteed Loans\2\:
FHA Single-Family..................................... 303 (13)-0 318 (12)-0
VA Mortgage........................................... 155 4-6 154 3-5
FHA Multi-Family...................................... 79 5-6 83 11-14
Federal Family Education Loan Program................. 75 13-23 86 5-10
Small Business Administration......................... 25 4-5 26 2-3
Export-Import Bank.................................... 17 6-8 18 3-5
Farm Service Agency................................... 9 1-2 8 1-2
CCC Export Credits.................................... 12 4-5 5 2-3
Other Guaranteed...................................... 23 2-3 27 3-4
-------------------------------------------------------
Total Guaranteed Loans................................ 699 26-58 727 18-46
Federal Insurance:
Banks................................................. 1,885 (5)-15 1,919 (6)-(4)
Thrifts............................................... 691 15-25 709 (2)-1
Credit Unions......................................... 253 ............ 266 ............
-------------------------------------------------------
Subtotal, Deposit Insurance.......................... 2,829 10-40 2,894 (8)-(3)
-------------------------------------------------------
PBGC.................................................. 950 20-40 853 30-60
Disaster Insurance.................................... 238 14-15 354 13-14
Other Insurance....................................... 484 13-14 512 11-12
-------------------------------------------------------
Total Federal Insurance............................... 4,445 57-109 4,613 46-83
-------------------------------------------------------
Total Federal Credit and Insurance.................... 5,299 120-224 5,501 94-180
-------------------------------------------------------
GSEs:\3\
Fannie Mae............................................ 744 ............ 787 ............
Freddie Mac........................................... 567 ............ 552 ............
Federal Home Loan Banks............................... 140 ............ 122 ............
Sallie Mae\4\......................................... ............ ............ ............ ............
Farm Credit System.................................... 51 0-1 53 0-1
-------------------------------------------------------
Total GSEs............................................ 1,502 0-1 1,514 0-1
Total Federal and Federally Assisted Credit and
Insurance........................................ 6,801 120-225 7,015 94-181
----------------------------------------------------------------------------------------------------------------
*Less than $500,00.
\1\Direct loan future costs are program account outlays projected into the future plus the embedded loss from
outstanding loans. Loan guarantee costs are program account outlays plus liquidating account outlays (and
outlays from defaulted guarantees that result in loans receivable) projected into the future. Future insurance
costs are the equivalent of program plus liquidating costs through 2001, plus the accrued liability remaining
at the end of 2001.
\2\Excludes loans and guarantees by deposit insurance agencies and programs not included under credit reform,
such as CCC farm supports. Defaulted guarantees which become loans receivable are accounted for in guaranteed
loans.
\3\Net of borrowing from Federal sources, other GSEs, and federally guaranteed loans.
\4\The face value and Federal costs of Federal Family Education Loans in Sallie Mae's portfolio are included in
that account above.
Deposit insurance costs declined sharply, following the closure of so
many insolvent banks and thrifts in the 1980s. Depository institutions,
which tend to borrow short and lend longer-term, benefited substantially
from the decline in interest rates and the steepening yield curve of the
early 1990s, as well as from the low unemployment, strong incomes and
profits, and continued low interest rates of the past year. Banks
especially had record earnings in 1993-95, built strong capital
positions, and restored the reserves of the Bank Insurance Fund (BIF).
The banks' strong capital cushion will help to buffer BIF against the
effects of interest rate risk, increasingly complex financial
instruments, and
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more intense competition as regulatory, geographic, and
functional barriers fall.
Student loan costs, both direct and guaranteed, are also reduced by
declining interest rates, in particular the expectation that rates will
continue down as the Federal budget moves toward balance. The direct
loan program gains from lower borrowing costs; the guaranteed loan
program gains from lower interest supplements while students are in
school or when interest rates are high. Default rates have also been
reduced, primarily by excluding formerly high-default schools and
ineligible students from the program.
Farm Service Agency direct loans, some of which have very low interest
rates by statute, also have lower interest costs when interest rates
come down. These portfolios also benefited from the recovery in farm
income and land values and in rural economies.
The Small Business Administration, in an effort to ensure the
continued availability of credit to small businesses, has adopted a
policy of reducing, even eliminating, subsidies for its primary loan
programs. Larger fee income, increased risk-sharing with guaranteed
lenders, and a proposed shift of the Section 504 Community Development
Company program to a direct loan program, all reduce the subsidies paid
by SBA.
Eximbank, too, has adopted a policy of reducing or eliminating
subsidies. Higher fees, collateralization, escrow accounts, and asset-
based financing are some of the methods used.
For one program, FHA multi-family loan guarantees, the current
estimate of future costs is higher than previous estimates. Before now,
the cost of this program did not include the effect of the Federal
rental subsidies, which many of these properties receive, on their
financial condition. Current law does not allow for indefinite
continuation of these subsidies at their current levels. Reductions in
rental subsidies would create some mortgage defaults, resulting in
payments from the FHA insurance fund. These costs, along with proposals
to minimize them, have been reflected for the first time in the estimate
of future costs.
Pension guarantee cost estimates amount to $30-60 billion this year,
as a result of refinements in the model, and the effect of lower
interest rates on the value of future pension benefits. However, good
economic conditions with high profits reduced sponsor bankruptcies last
year. Rising stock markets and increased funding under the Retirement
Protection Act of 1994 bolstered pension plans. And the Pension Benefit
Guaranty Corporation negotiated 30 major settlements under their Early
Warning Program that provided $13 billion in new contributions from
companies.
In sum, the present value of future costs of Federal credit and
insurance programs is now estimated to total $94 billion to $181
billion--a substantial improvement from the $120 billion to $225 billion
estimated last year.
II. Developing A Performance Measurement Framework
It is not enough to have a good rationale for a Federal program and to
know its cost; it is also necessary to assess whether it is achieving
its intended results. The Government Performance and Results Act (GPRA)
is encouraging such assessments by requiring agencies to define their
missions and long-term objectives using strategic plans, to set annual
performance goals, and to measure actual performance against those
goals.
Credit program managers, who have long worked together on credit
reform and other matters, established a Performance Measures Task Force
under the Federal Credit Policy Working Group to develop a common
framework of such measures. These are to be used in their agencies'
annual performance plans under GPRA and their budget requests to explain
what they intend to accomplish. The same measures are to be shown in
their annual performance reports and Chief Financial Officer's
Accountability Reports to explain actual results.
The Task Force believes that a common core of indicators would be
useful to program managers, the Executive Branch, the Congress, and the
public--helping them to understand and compare credit programs. The
group sought to identify the most appropriate measures, whether or not
data was currently collected on them by some or all agencies. They
expect that agencies will supplement the core measures with program-
specific measures whenever they are useful to assess their programs.
The common framework has four main categories of indicators: inputs
(the resources used), outputs (the goods or services produced), outcomes
and net impacts (the gross and net effects on society). The specific
measures below reflect discussion so far, but are still subject to
modification.
Inputs. The group chose three common inputs: program objectives and
performance goals (planning inputs), subsidy costs, and administrative
costs (both resource inputs).
Borrowers have been making lower downpayments, which mean that the ratios between loan principal and
collateral value(LTV ratios) are higher, posing greater credit risk for lenders. The proportion of conventional
mortgages with LTV ratios over 90 percent rose from 7 percent in 1989 to 27 percent in 1994. The average LTV
ratio of conventional mortgages rose from 75 percent in 1989 to over 80 percent in 1995. Data from Freddie Mac
indicate that the default rates of conventional mortgages with LTV ratios over 90 percent are six times higher
than the default rates on conventional loans with 80 percent LTV ratios.
Depository institutions, Fannie Mae, and Freddie Mac have increased their commitment to affordable
lending programs that allow borrowers to make downpayments of 5 percent or less while loosening other
underwriting guidelines. Compensating factors lessen, but may not wholly offset, the resulting increase in
risk.
When the volume of single-family originations declined by 24 percent in 1994 and further in 1995, many
originators entered the markets for home equity loans and lines of credit and for first mortgage loans to
borrowers with checkered credit histories (so-called B- to D-quality loans), causing the volume of such loans
to increase.
The use of credit scoring in the single-family mortgage market will increase at an accelerating rate in the
next few years. Credit scores are numerical assessments that rank borrowers by their relative default risk.
Scores are calculated by statistical models that use information proven to be predictive of loan performance
drawing on data from borrower credit reports to predict a borrower's future performance on consumer debt (auto,
credit card, or installment debt) or on a mortgage loan.
Credit scores have been used to evaluate applications for nonmortgage debt for nearly 40 years, but have been
used in single-family mortgage lending only in the last five years. Industry research has found a strong
relationship between low consumer credit scores at origination and the likelihood of future default on mortgage
loans. Fannie Mae has found that, although borrowers with scores below 620 represent only a small percentage of
all borrowers, as a group they account for about 50 percent of the defaults that eventually occur.
In 1995, first Freddie Mac and then Fannie Mae urged lenders to use generic credit scores in the underwriting
process, provided guidance about how lenders should do so, and indicated that they would use consumer credit
scores as part of the post-purchase review process. The potential benefits of scoring and the commitment of
Fannie Mae and Freddie Mac to using credit scores are likely to accelerate the industry's development and use of
scores.
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The Federal Home Loan Bank System's financial performance and
condition continued to be strong in 1995. Outstanding advances to
members reached $122.1 billion at year-end 1995, up from $116.2 billion
at the
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end of 1994. Total System capital at the end of 1995 was $14.7
billion, compared to $12.9 billion at the end of 1994. For calendar year
1995, the System's reported net income rose to $1.2 billion, up from
$0.9 billion in 1994. Return on equity in 1995, after adjustment for
payment of interest to REFCorp and other expenses, was approximately 6.5
percent.
The Federal Home Loan Banks are required to pay the greater of $300
million or 20 percent of their annual net income to help pay the cost of
interest on bonds issued by the Resolution Funding Corporation, REFCorp.
REFCorp was created by FIRREA to provide initial capital for the
Resolution Trust Corporation. The need to generate income to meet this
obligation to REFCorp and provide a return on members' investment is a
driving force behind the large increase in the System's investment
activity in recent years. Investments other than advances were $146.8
billion as of December 31, 1995, an increase of 28 percent over just one
year earlier. Thus, the need to generate the funds to pay REFCorp has
encouraged the System to expose itself to new kinds of risk and resulted
in a departure from the System's focus--making advances to members.
Historically, the System's exposure to credit risk has been virtually
nonexistent. All advances to member institutions are collateralized, and
the FHLBanks have the ability to call for additional or substitute
collateral during the life of an advance. In the over sixty years of the
System's existence, no FHLBank has ever experienced a loss on an
advance. The System's increasing investment activities, however, have
added new sources of credit risk, for example, to the extent that there
is a risk of default by the FHLBanks' counterparties to off-balance
sheet interest rate exchange agreements.
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The System is also exposed to interest rate risk. The Financial
Management Policy issued by the FHLBanks' regulator, the Federal Housing
Finance Board, requires the FHLBanks to take a number of specific steps
to manage their interest rate risk. The FHLBanks manage their interest
rate risk by analyzing the sensitivity of the market value of their
equity to changes in interest rates, charging prepayment fees on
advances to members, restricting the types of mortgage-backed securities
that they can invest in, and using interest rate exchange agreements.
The System's exposure to risk will continue to be monitored carefully to
ensure that it remains safe and sound.
Despite the System's current profitability and apparent strength,
there is a need to strengthen the capital structure of the System in
order to protect against future downturns. The Housing and Community
Development Act of 1992 required that studies of the FHLBS be performed
by the Congressional Budget Office, the General Accounting Office, the
Department of Housing and Urban Development, the Federal Housing Finance
Board, and System shareholders. All of these studies agreed that risk-
based capital standards should be adopted for the System.
In response to these studies of the FHLBS which were completed in 1993
and 1994, last year the Administration and Congress proposed legislation
to reform and modernize the Federal Home Loan Bank System. Both
legislative proposals addressed the System's mission, capital structure,
and capacity to pay interest obligations on the REFCorp bonds. The House
of Representatives conducted hearings on the two proposals in 1995, and
it is anticipated that the issue will be taken up again in 1996.
The Administration's proposal attempts to keep the System safe, sound,
and focused on its public purpose. It would maintain the System's
important role in housing finance, particularly its role in supporting
portfolio lending. It would make System membership fully voluntary, with
equal rights and responsibilities for all members. Perhaps most
importantly, the Administration's proposal would enhance the safety and
soundness of the System by creating minimum capital standards, including
risk-based capital requirements, for each Federal Home Loan Bank and for
the System as a whole, and by instituting a set of procedures for
correcting capital deficiencies.
The role and risks of the FHLBS must continue to be examined and
monitored in the face of rapidly changing financial markets. The
increased use of credit scoring systems by mortgage lenders may
eventually lead to less of a role for portfolio lenders in housing
finance markets. In addition, it is important to continue to evaluate
the System's role in housing finance in light of potential changes in
the structure of the industry it serves.
Federal Housing Administration (FHA)
Trends in Program Size. As the national surge in single-family
refinancing business ebbed in 1995, commitments in the FHA Mutual
Mortgage Insurance (MMI) single-family program fell to $50 billion in
1995, after a volume of $89 billion in 1994. FHA service to low-income
and minority home buyers, however, remained strong. The proportion of
FHA-insured home purchase loans to African-American and Hispanic home
buyers continued at more than twice the proportion of conventional home
purchase loans to these groups, and increased from 1994 to 1995.
National Homeownership Strategy. In June of 1995, the President
announced a National Homeownership Strategy to add up to 8 million new
families to America's homeownership rolls by the end of the year 2000,
lifting the country's homeownership rate to an all-time high. This
Strategy will strive to eliminate barriers that prevent lower-income
working families, minorities, and immigrants from becoming homeowners.
For example, it will actively promote wider use of flexible underwriting
criteria, which would allow more buyers to qualify for mortgages, and it
will increase homeownership counseling programs, which help first-time
buyers find homes, qualify for mortgages, and budget their incomes to
meet their mortgage payments.
FHA will be a full partner in this Strategy. In 1995, FHA took action
to increase the availability of affordable homeownership, particularly
in the central cities, by simplifying its rehabilitation mortgage
insurance program, and establishing the Single Family Property
Disposition program to sell FHA-foreclosed homes at a discount to
nonprofit groups for rehabilitation and resale to lower-income buyers.
FHA as a Performance-Based Organization. In 1997, the Administration
will seek to transform FHA into a ``Performance-Based Organization''
with flexibility in human resources management, procurement, and other
administrative functions. FHA will continue to operate within HUD; it
will be led by executives operating under term, performance-based
contracts negotiated by the Secretary.
FHA Assignment Alternative. FHA is now preparing to implement
legislation, expected to be passed soon by the Congress, establishing an
alternative to FHA's current assignment program for delinquent
borrowers. Currently, if an otherwise qualified FHA homeowner
experiences temporary financial trouble and becomes 90 days delinquent,
FHA can pay a full claim on their behalf and take over servicing of the
mortgage. The borrower is then allowed up to 3 years to bring the loan
to current status. The proposed alternative would provide FHA with tools
to encourage private lenders to forebear instead of assigning the
mortgage to HUD. This alternative would improve the targeting and
efficiency of forbearance, while allowing FHA homeowners experiencing
temporary economic distress to stay in their homes.
Potential Effects of Credit Scoring. As the use of credit scoring in
the underwriting of conventional
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mortgages increases, some borrowers who
have little cash but excellent credit histories and would have
traditionally been served by FHA's single-family mortgage insurance
program will find that they are eligible for conventional financing on
attractive terms. More importantly, applicants who have checkered credit
histories will face tighter conventional underwriting constraints and
may often be unable to obtain a conventional loan unless they can make
downpayments of 20 percent or more. Those who can not and whose
mortgages are small enough to qualify for FHA insurance will be shifted
to FHA. Although the magnitude of this potential shifting of credit risk
to FHA is uncertain, research on the relationship between consumer
credit scores and likelihood of mortgage default suggests that it could
significantly increase FHA default rates.
Sale of Single- and Multi-Family Assets. In March, 1994, the FHA
launched an aggressive program to sell HUD-held mortgages. The goals of
the program are to maximize value of HUD-held assets and assist in
redeployment of its staff and resources to manage the insured portfolio,
particularly in light of downsizing of the organization. The initiative
was a key element in the Administration's larger effort to reinvent HUD.
To date, FHA has sold 769 multi-family mortgages, 28,243 single family
mortgages, and 2,700 Title I notes. These mortgage sales have not only
succeeded in streamlining the agency's operation and management, they
have generated proceeds which exceed the expected value to HUD (if the
loans were held) of more than $500 million in 1995. In 1996 and 1997 FHA
plans to sell an additional 600 multi-family and 65,000 single family
mortgages with a total outstanding principal balance of approximately $6
billion.
Multi-family Portfolio Reengineering. Last year, the Administration
proposed ``Mark-to-Market,'' legislation intended to address long-
standing problems in the portfolio of properties which have mortgages
insured by FHA and also receive rental subsidies for low-income tenants.
This Budget includes a proposal, ``Portfolio Reengineering,'' which
retains many of the features of last year's proposal. The core
principles of this initiative are the use of market incentives to
improve the efficiency and quality of assisted housing and expanded
housing choices for residents and communities. This initiative would
recognize economic losses that have occurred in FHA's multi-family
portfolio, eliminate over-subsidization of some properties, and provide
an orderly way of managing its restructuring. This portfolio provides
housing to nearly 850,000 lower-income households in 8,500 privately
owned but HUD-subsidized projects, who would be protected if eligible by
receiving housing subsidies.
This initiative will generate savings in rental subsidies since many
properties receive subsidies in excess of market rents. Allowing the
rents of projects to adjust to market levels will in some cases reduce
project income and necessitate writing down the mortgages of these
properties to reflect their true economic value. This will result in
claims being paid out of the FHA fund. HUD will use third-party partners
to produce efficient and proactive mortgage restructuring. In 1997, HUD
intends to focus restructuring on projects where contracts expire and
the current rents are above market. The Administration is willing to
discuss with Congress mechanisms to take account of consequences
(including tax effects) for owners who enter into restructuring
agreements with HUD. The effect of the proposal would be a savings of
$1.4 billion in claims costs.
Department of Veterans Affairs
Trends in Program Size. As interest rates declined in the 1990s,
lending in DVA's loan guaranty program increased dramatically, from
$15.7 billion in 1990 to $55 billion in 1994. It has since fallen, to
$22 billion in 1995. In the long term, loan volume in this program is
driven by the size and composition of the veterans population. As this
population continues to diminish over the next several years, loan
volume is expected to fall gradually, from $22 billion in 1995 to about
$20 billion in 2001.
Performance Measures. DVA uses a cross-section of several performance
measures to track the status of its guaranteed loan portfolio and the
quality of its management of this portfolio. For example, the early
foreclosure rate, which is the percent of loans in foreclosure within
three years of origination, measures the quality of underwriting. The
foreclosure avoidance through servicing ratio, which is the percentage
of seriously delinquent loans that do not go into foreclosure, measures
the success of VA's supplemental servicing program at helping veterans
keep their homes. The six-month pipeline of property in inventory
measures the quality of property disposition.
Rural Housing Insurance Fund
The primary Rural Housing Service (RHS) programs are the Section-502
single-family direct and guaranteed loan programs and the Section-515
multi-family direct loan program. The 502 direct loan program provides
qualified borrowers with loans for the purchase, rehabilitation, or
repair of rural single-family homes. Participants qualify if their
income is less than 80 percent of State median income, they live in a
legislatively defined ``rural'' area, and they are unable to obtain
credit at affordable terms from a private institution. The 502
guaranteed loan program guarantees up to 90 percent of a loan on an
unsubsidized basis for the purchase of new or existing housing. The 515
program, which generally lends to private developers, finances both the
construction of new rural rental housing and the purchase and
rehabilitation of existing substandard rental housing. Units are
occupied by low- and moderate-income households, elderly households, or
handicapped individuals. Currently, re-authorization of the 515 program
is needed in order for any new construction to be financed from 1996
appropriated funds.
[[Page 137]]
Cost and Risk. The primary costs in the 502 guaranteed program come
from loan defaults. The default rate is 7.5 percent, and an average of
21 percent of the principal amount of the defaulted loan is not
recovered. Both direct loan programs subsidize loans by setting interest
rates below the Treasury rate. The primary cost in the direct programs
is due to the interest rate subsidy. The rate charged 502 borrowers
depends on their income; currently, the average effective interest rate
for the outstanding subsidized portfolio is 3.4 percent. A 515
borrower's effective interest rate is generally fixed at 1 percent.
The riskiness in the RHS portfolio is most notable in the 502 direct
loan program, whose risk is significantly greater than for conventional
private sector loans for two reasons. First, RHS lends to very low- and
moderate-income households who, as an eligibility requirement, are
unable to obtain private credit. Second, because RHS' interest rate is
periodically adjusted for changes in the borrower's income, the
underlying costs of the outstanding portfolio change as borrowers'
ability to pay changes. During economic slowdowns, incomes go down, more
defaults and delinquencies are likely, and the effective interest rate
paid by borrowers drops. At the same time, the 502 interest subsidy
costs increase.
Progress in Reducing Costs. RHS implemented a new rule in 1996 that
would save costs in the 502 direct loan program. Two major changes
include how RHS determines repayment ability and the amount of payment
assistance that a borrower receives. Instead of using a family budget to
determine repayment ability, RHS now uses two expenditure-to-income
ratios. The loan principal, interest, taxes and insurance (PITI) cannot
exceed 29 percent of adjusted family income for very low income
borrowers and 33 percent for low income borrowers. The total debt ratio
(TD) is capped at 38 percent of income for all borrowers. This reduces
the complexity of making loans, is more objective, and imposes a smaller
administrative burden. RHS also implemented an escalating interest rate
structure which insures that lower payment assistance is provided as
borrower income increases.
RHS has also begun implementing the Dedicated Loan Origination Service
(DLOS), consolidating the servicing of the 502 direct single family
housing loan portfolio in one location, rather than in county offices.
DLOS objectives include establishing an escrowing system; reducing the
foreclosure rate; lowering delinquency rates, loan losses and operating
costs; and bringing the accounting more in line with the commercial
sector. The new efficiencies will improve servicing of the portfolio
with 1,500 fewer employees. The current implementation plan would save
approximately $250 million from 1996-2000. The 1997 subsidy rate
reflects the .83 percentage point reduction in the subsidy rate that is
a direct result of the DLOS-related changes.
For 1997, RHS will propose a ``balloon payment'' for the 515
Multifamily housing loan program. The proposal would require that all
new 515 loans be for 30 years while amortized over 50 years. This would
create a lump sum payment in the 30th year for the balance of the loan.
This legislative proposal would lower the 515 loan subsidy rate by 8
percentage points because of the accelerated repayment to the Treasury
that occurs in the 30th year.
VII. Federal Insurance Programs
Deposit Insurance
Federal deposit insurance was instituted in the 1930s to protect
individual depositors from losses caused by failures of insured
institutions. Deposit insurance also protects against widespread
disruption in financial markets by reducing the probability that the
failure of one financial institution will lead to a cascade of other
failures. The Federal Deposit Insurance Corporation (FDIC) insures the
deposits of banks and thrifts through two separate insurance funds, the
Bank Insurance Fund (BIF) and the Savings Association Insurance Fund
(SAIF). Deposits of credit unions are insured through the National
Credit Union Administration (NCUA). Currently, deposits are insured up
to a limit of $100,000 per account.
The 1980s and early 1990s were a turbulent period for the bank and
thrift industries, with over 1400 bank failures and 1100 thrift
failures. The Federal Government responded with the Financial
Institutions Reform, Recovery and Enforcement Act (FIRREA) of 1989 and
the Federal Deposit Insurance Corporation Improvement Act (FDICIA) of
1991. These legislative reforms, combined with more favorable economic
conditions, helped to restore the health of depository institutions and
to enhance public confidence in the deposit insurance system.
Prior to the enactment of FIRREA, thrift deposits were insured by the
Federal Savings and Loan Insurance Corporation (FSLIC). FIRREA abolished
FSLIC and established the Resolution Trust Corporation (RTC) as a
temporary agency to handle the unprecedented number of failures created
by the thrift crisis. In July 1995, responsibility for handling new
thrift failures was transferred from RTC to SAIF, and the remaining
assets and liabilities of RTC were transferred to FDIC's FSLIC
Resolution Fund on December 31, 1995. During its life, the RTC handled
over 747 failed thrifts with over $400 billion in assets, at a cost to
taxpayers of about $90 billion.
Current Industry and Insurance Fund Conditions. The National Credit
Union Share Insurance Fund continues to remain strong with assets of
$3.4 billion. In fiscal year 1995, the income generated from the 1
percent deposit eliminated the need to assess the annual premium. In
fact, earlier this year the Fund
[[Page 138]]
paid a $106 million dividend to
federally insured credit unions due to an excess over the 1.30 percent
reserve requirement. The level of reserves had reached 1.33 percent at
the end of fiscal year 1995. In addition, the Fund did not report any
insurance losses from failed credit unions during fiscal year 1995. For
insurance year 1996, the required annual insurance premium of one-
twelfth of 1 percent of total member share accounts has been waived.
The health of the banking industry has improved dramatically over the
last few years. Banks achieved record levels of earnings in 1993 and
1994. This strong performance enabled banks to recapitalize the BIF,
which reached its statutorily-designated reserve ratio of 1.25 percent
in mid-1995. As a result of BIF's recapitalization, the FDIC has lowered
deposit insurance premiums for banks. The rate for the healthiest banks
is currently only the statutory minimum of $2,000 per year.
The earnings of the thrift industry also have showed strong
improvement in the last few years. The thrift industry reported net
income of $1.2 billion in 1991, $5.1 billion in 1992, $4.9 billion in
1993, and $4.3 billion in 1994. For the first nine months of 1995, the
industry reported net income of $3.2 billion. Despite the continued
profitability of the industry, the long-term outlook for thrifts is
uncertain. Deposit insurance premiums for thrifts remain high, at 23
cents per $100 of deposits for the healthiest thrifts. Thus, a healthy
thrift with $100 million in deposits would pay $230,000 for deposit
insurance this year, while a healthy bank of the same size would pay
only $2,000. This large disparity between the deposit insurance premiums
paid by banks and thrifts threatens to destabilize the thrift industry
and its deposit insurance fund, SAIF. In addition, the thrift industry
remains vulnerable to geographic asset concentration, swings in interest
rates, and increasing competition from banks and other financial
institutions.
In contrast to BIF's recapitalization, SAIF's reserve ratio stood at
about 0.46 percent at the end of fiscal year 1995, only about one-third
of the required 1.25 percent. One reason that SAIF's reserves have grown
so slowly compared to BIF's is that SAIF-insured institutions are
obligated under current law to pay the interest on Financing Corporation
(FICO) bonds that were used to finance part of the cost of the recent
thrift crisis. The SAIF is required by law to maintain its premium rates
at about 23 cents per $100 of deposits until the fund is recapitalized.
The FICO obligation currently consumes about 45 percent of premium
income that would otherwise be available to build up the reserves of
SAIF.
The Administration's Proposal to Address the Problems of SAIF. The
Administration projects that the current 23-basis point differential
between SAIF and BIF insurance premiums will have a detrimental effect
on SAIF's assessment base. Because of the differential, thrifts have an
incentive to find ways of reducing their reliance on SAIF-insured
deposits. Thrifts might do this by shifting deposits to BIF-insured
affiliates, shrinking their balance sheets, or relying more heavily on
non-deposit liabilities such as advances from the Federal Home Loan Bank
System. Preliminary evidence indicates that thrifts are indeed moving to
reduce their reliance on SAIF-insured deposits. As the available SAIF
assessment base shrinks, the proportion of SAIF's premium income that
must go to pay FICO obligations will increase. Within only a few years,
the portion of SAIF premiums available to pay FICO interest could be
insufficient to cover the $793 million annual cost.
Without legislative action, the current BIF-SAIF premium disparity
will persist for many years. The Administration does not currently
project that SAIF will recapitalize on its own within the 10-year budget
horizon. Even more optimistic forecasts do not project that SAIF will
recapitalize within the next 5 years. Even if SAIF recapitalizes on its
own without legislation, a significant premium disparity would continue
to exist until 2019 because of SAIF-insured institutions' obligation to
pay FICO bond interest.
Last year, the Administration proposed legislation to remedy the
problems of SAIF. The main elements of the proposal are a one-time
special assessment on SAIF-insured deposits to immediately bring SAIF's
reserve ratio up to the required 1.25 percent, a requirement that the
FICO interest payments be shared across banks and thrifts on a pro rata
basis, and a merger of BIF and SAIF. Congress adopted a very similar
proposal in its seven-year balanced budget plan. As the prospect of a
significant BIF-SAIF premium disparity has become reality, and
preliminary evidence that the deposit insurance premium disparity is
having a harmful impact on SAIF's assessment base has emerged, the
Administration believes it is increasingly urgent that action be taken
to address this problem through legislation like that proposed by the
Administration last year.
Projecting Deposit Insurance Losses in a Changing Environment.
Predicting failures of depository institutions and the associated impact
on the deposit insurance funds is a significant challenge. In recent
years, rapidly changing conditions in depository institutions' operating
environment have made predicting insured institution failures more
difficult. First, depository institutions face increasing competition
from non-bank financial institutions. Depository institutions are
responding to this challenge by changing their products, investments,
and their role in the economy. Second, it is extremely difficult to
assess the potential impact that increasing off-balance sheet activity,
such as investment in derivatives, has had on the risk exposure of the
deposit insurance funds. Finally, it is too soon to tell with certainty
how much the legislative changes of the past few years will affect
deposit insurance losses. For example, stricter regulatory and capital
requirements imposed by FDICIA should have the long-term effect of
reducing losses borne by the deposit insurance funds.
[[Page 139]]
The Administration is continuing to examine and monitor the
effectiveness and efficiency of the current regulatory system. In
addition, the Administration will continue to study the need for policy
changes to protect the health of the deposit insurance funds, to improve
the long run profitability of the bank and thrift industry, and to
support the growth of the financial services sector.
Pension Insurance
The Pension Benefit Guaranty Corporation (PBGC) insures defined
benefit pension plans of private employers. PBGC steps in when a company
becomes insolvent and its pension plan cannot pay the full value of
benefits guaranteed by law. At any given time, PBGC's exposure to claims
relates to the underfunding of pension plans, that is, to any amount by
which expected future benefits exceed plan assets.
The Retirement Protection Act (RPA), signed into law December 1994,
strengthens pension safeguards and improves program operations. The RPA:
[[Page 147]]
Table 8-3. ESTIMATED 1997 SUBSIDY RATES, BUDGET AUTHORITY, AND LOAN LEVELS FOR DIRECT LOANS\1\
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
1997 Weighted
average 1997 Subsidy 1997
Agency and Program subsidy as a budget Estimated
percent of authority loan levels
disbursements
----------------------------------------------------------------------------------------------------------------
Funds Appropriated to the President:
Micro and small enterprise development........................... 12.20 --* 1
Foreign Military Financing....................................... 10.81 40 370
Overseas Private Investment Corporation.......................... 5.00 4 80
Agriculture:
Agricultural credit insurance fund............................... 12.85 70 546
Rural housing insurance fund..................................... 5.81 225 1,668
Rural economic development loans................................. 22.11 3 14
Rural electrification and telephone.............................. 2.52 41 1,620
Public Law 480 direct loans...................................... 81.79 179 219
Distance learning and medical link loan program.................. 1.62 2 125
Rural community facility loan program............................ 7.44 15 200
Rural business and industry loans................................ -1.56 -1 50
Rural telephone bank............................................. 1.33 2 175
Rural development loan fund...................................... 46.16 37 80
Rural water and waste disposal loan program...................... 8.57 69 800
Education:
Federal direct student loan program.............................. 0.35 53 15,101
Interior:
Bureau of Reclamation loans...................................... 40.00 13 36
State Department: Repatriation loans............................... 80.00 1 1
Transportation:
Minority business resource center program........................ 10.00 --* 15
Alameda Corridor project loan program............................ 14.67 59 400
Treasury:
Community development financial institutions fund................ 35.83 20 56
Veterans Affairs:
Direct loan...................................................... 46.77 --* --*
Loan guarantee fund.............................................. 1.56 14 894
Guaranty and indemnity fund...................................... 0.95 13 1,417
Vocational rehabilitation........................................ 1.75 --* 2
Native american veteran housing loan program..................... 7.72 1 18
Other Independent Agencies:
Export-Import Bank\2\............................................ 4.00 136 3,396
Federal Emergency Management Agency:
Disaster assistance............................................ 5.54 2 25
Small Business Administration:
Disaster loans................................................. 7.90 66 667
--------------------------------------------
Total.............................................................. 3.80 1,064 27,976
----------------------------------------------------------------------------------------------------------------
*Less than $500,000.
\1\Additional information on credit reform subsidy rates is contained in the Federal Credit and Insurance
Supplement to the budget for 1996.
\2\Includes 1996 carryover budget authority.
[[Page 148]]
Table 8-4. ESTIMATED 1997 SUBSIDY RATES, BUDGET AUTHORITY, AND LOAN LEVELS FOR LOAN GUARANTEES\1\
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
1997 Weighted-
average 1997 Subsidy 1997
Agency and Program subsidy as a budget Estimated
percent of authority loan levels
disbursements
----------------------------------------------------------------------------------------------------------------
Funds Appropriated to the President:
Micro and small enterprise development......................... 3.73 1 38
AID housing and other credit guarantees........................ 11.83 5 41
Overseas Private Investment Corporation........................ 2.50 65 2,250
Agriculture:
Agricultural credit insurance fund............................... 2.60 69 2,650
Commodity Credit Corporation: Export credits..................... 8.00 390 5,500
Rural housing insurance fund..................................... 0.27 6 2,400
Rural business and industry loan program......................... 0.94 7 750
Rural community facility loan program............................ 0.41 -* 100
Commerce:
Fishing vessel obligations....................................... 1.00 -* 25
Defense:
Family Housing Improvement Fund.................................. \2\10.00 ............. .............
Education:
Federal family education loan program............................ 10.04 1,918 19,114
Health and Human Services:
Health professions graduate student loan program................. 0.34 -* 140
Housing and Urban Development:
Community development (Sec. 108)................................. 2.30 46 2,000
Federal Housing Administration general and special risk.......... 1.06 \3\41 \4\12,933
Federal Housing Administration mutual mortgage................... -2.88 -1,255 70,721
GNMA secondary mortgage guarantees............................... ............. ............. 110,000
Indian housing guarantee......................................... 8.13 3 37
Interior:
Indian loan guaranty and insurance fund.......................... 13.00 5 35
Transportation:
Title XI maritime guaranteed loans............................... 7 40 800
Veterans Affairs:
Guaranty and indemnity fund...................................... 1.47 361 24,547
Loan guaranty fund............................................... 15.04 -* 1
Other Independent Agencies:
Export-Import Bank\5\............................................ 4.45 636 14,294
Small Business Administration:
Business Loans................................................. 2.68 203 11,653
--------------------------------------------
Total\4\....................................................... 9.50 2,660 280,030
----------------------------------------------------------------------------------------------------------------
*Less than $500,00.
\1\Additional information on credit reform subsidy rates is contained in the Federal Credit and Insurance
Supplement to the budget for Fiscal Year 1996.
\2\The subsidy rate is an estimated weighted average subsidy rate. Actual rates will be calculated on a
transaction by transaction basis at the time of loan obligation.
\3\Subsidy BA represents the net amount resulting from new loans in both positive and negative subsidy programs.
Since appropriations requested are for the gross amount of subsidy BA for positive subsidy programs (to be
offset by the negative subsidy), the BA amount in this table does not represent the total gross appropriations
request.
\4\Loan levels do not include standby commitment authority and therefore do not match levels requested in
appropriations.
\5\Includes 1996 carryover budget authority.
[[Page 149]]
Table 8-5. SUMMARY OF FEDERAL DIRECT LOANS AND LOAN GUARANTEES
(In billions of dollars)
----------------------------------------------------------------------------------------------------------------
Actual Estimate
---------------------------------------
1993 1994 1995 1996 1997
----------------------------------------------------------------------------------------------------------------
Direct Loans:
Obligations......................................................... 22.1 22.7 30.9 34.4 45.4
Disbursements....................................................... 27.1 19.3 22 27.7 34.7
Subsidy budget authority............................................ 2.1 2.8 2.6 1.6 1.0
Loan Guarantees:
Commitments......................................................... 169.9 204.1 138.5 179.0 172.0
Lender Disbursements................................................ 144.3 194.2 117.9 139.2 152
Subsidy budget authority............................................ 4.1 2.6 5.1 4.4 3.7
----------------------------------------------------------------------------------------------------------------
Table 8-6. NEW DIRECT LOAN OBLIGATIONS AND GUARANTEED LOAN COMMITMENTS BY FUNCTION
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
Direct loan obligations Guaranteed loan commitments
-----------------------------------------------------------
Function 1995 1996 1997 1995 1996 1997
actual estimate estimate actual estimate estimate
----------------------------------------------------------------------------------------------------------------
050 National Defense............................... ........ ........ ........ 300 342 229
150 International affairs.......................... 2,476 3,992 4,067 14,354 17,906 18,624
270 Energy......................................... 1,320 1,426 1,620 ........ ........ ........
300 Natural resources and environment.............. 16 33 36 ........ ........ ........
350 Agriculture.................................... 9,794 6,463 7,605 7,638 8,150 8,150
370 Commerce and housing credit\1\................. 2,496 2,537 5,536 71,057 105,263 97,707
400 Transportation................................. 98 15 415 118 229 571
450 Community and regional development............. 1,427 1,052 1,952 2,366 2,360 2,885
500 Education, training, employment, and social
services........................................... 11,547 16,317 21,770 19,960 20,433 19,114
550 Health......................................... ........ ........ ........ 275 210 140
600 Income security................................ ........ ........ ........ 22 37 37
700 Veterans benefits and services................. 1,535 2,104 2,344 22,162 24,033 24,548
800 General government............................. 147 379 ........ ........ ........ ........
990 Multiple functions............................. 45 55 106 ........ ........
-----------------------------------------------------------
Total........................................... 30,901 34,373 45,451 138,272 178,963 172,005
-----------------------------------------------------------
ADDENDUM
Secondary guaranteed loans.......................... ........ ........ ........ 142,000 110,000 110,000
----------------------------------------------------------------------------------------------------------------
\1\Commitments by GNMA to guarantee securities that are backed by loans previously insured or guaranteed by the
Federal Housing Administration, Department of Veterans Affairs, or Farmers Home Administration (secondary
guarantees) are excluded from the totals and shown in the addendum.
[[Page 150]]
Table 8-7. DIRECT LOAN WRITE-OFFS AND GUARANTEED LOAN TERMINATIONS FOR DEFAULTS
----------------------------------------------------------------------------------------------------------------
In millions of dollars As percentage of outstanding
------------------------------ loans\1\
Agency or Program -----------------------------
1995 1996 1997 1995 1996 1997
actual estimate estimate actual estimate estimate
----------------------------------------------------------------------------------------------------------------
DIRECT LOANS
Funds Appropriated to the President:
Economic assistance loans......................... 32 ........ ........ 0.24 ........ ........
International debt reduction...................... ........ 3 4 ........ 0.67 0.92
Foreign military loans............................ 94 39 39 1.11 0.47 0.48
Department of Agriculture:
Rural electrification and telephone revolving fund 50 ........ ........ 0.15 ........ ........
Agricultural credit insurance fund................ 579 515 520 4.79 4.58 5.04
Rural housing insurance fund...................... 99 101 100 0.32 0.33 0.33
Public Law 480 Food Aid........................... 168 ........ 63 1.43 ........ 0.54
Department of Education:
Federal direct student loan program............... 14 12 52 0.49 0.15 0.27
Department of Commerce:
Economic development revolving fund (EDA)......... 2 ........ ........ 2.94 ........ ........
Department of Interior:
Bureau of Indian Affairs direct loans............. 11 4 4 17.74 14.81 7.41
Department of Veterans Affairs:
Veterans housing programs......................... 23 12 19 1.81 0.79 0.96
Independent Agencies:
Small Business Administration..................... 346 296 260 3.07 2.6 2.11
Export-Import Bank................................ 45 ........ ........ .60 ........ ........
-----------------------------------------------------------
Total, direct loan writeoffs.................... 1,463 982 1,061 ........ ........ ........
-----------------------------------------------------------
GUARANTEED LOANS
Funds Appropriated to the President
Housing and other credit guaranty programs........ 10 25 25 0.49 1.25 1.28
Overseas Private Investment Corporation........... 19 14 15 1.54 0.51 0.36
Microenterprise and other development guaranteed.. ........ 1 1 ........ 2.22 1.25
Assistance for the New Independent States of the
Soviet Union..................................... ........ ........ 8 ........ ........ 14.55
CCC export credit guarantees...................... 1,167 579 693 22.96 7.19 6.91
Foreign military loans............................ 9 7 2 0.14 0.11 0.03
Department of Agriculture:
Agricultural credit insurance fund................ 18 17 12 0.29 0.25 0.15
Rural development insurance fund.................. 21 27 23 3.48 4.86 4.98
Rural housing insurance fund...................... 1 11 14 22.00 46.00 54.00
Rural water and waste water disposal fund......... 1 ........ ........ 0.20 100.00 ........
Rural community facility loans fund............... ........ 54 ........ ........ 59.34 ........
Rural business and industry loans................. ........ 1 1 ........ 0.05 0.06
Department of Education:
Federal family education loans.................... 1,286 1,767 2,384 3.10 2.62 2.78
Department of Interior:
Indian loan guaranty and insurance fund........... 4 7 9 1.89 3.20 3.85
Department of Housing and Urban Development:
FHA-General and special risk guaranteed loans..... 1,033 1,956 1,875 1.24 2.34 2.16
FHA-mutual mortgage and cooperative housing loans. 3,969 3,658 4,124 1.25 1.10 1.17
Department of Transportation:
MARAD ship financing fund......................... 8 49 49 0.46 2.40 1.92
Department of Veterans Affairs:
Veterans housing programs......................... 1,664 2,500 2,360 1.07 1.55 1.34
Independent Agencies:
Small business administration..................... 635 629 816 2.40 2.16 2.36
Export-Import Bank................................ 353 16 78 2.56 0.11 0.54
-----------------------------------------------------------
Total, guaranteed loan terminations for default. 10,198 11,318 12,489 ........ ........ ........
-----------------------------------------------------------
DEFAULTED GUARANTEED LOANS THAT RESULT IN LOANS
RECEIVABLE
Funds Appropriated to the President:
Housing and other credit guaranty programs........ 1 35 39 0.23 8.20 8.86
Foreign military loans............................ 31 10 23 4.61 1.49 3.42
Department of Education:
Federal family education loans.................... 30 5 10 2.38 4.21 4.60
[[Page 151]]
Department of Housing and Urban Development:
FHA-mutual mortgage and cooperative housing loans. 139 851 510 3.23 32.21 53.80
FHA-general and special risk guaranteed loans..... 321 2,376 1,752 6.07 66.31 92.50
Department of Health and Human Services:
Health professions guaranteed student loans....... 8 13 13 2.06 3.20 2.95
Department of Veterans Affairs:
Veterans housing programs....................... 584 693 711 37.58 45.56 49.4
Independent Agencies:
Small Business Administration..................... 40 84 184 2.45 4.50 7.76
-----------------------------------------------------------
Total, writeoffs of loans receivable............ 1,447 4,067 3,903 ........ ........ ........
===========================================================
-----------------------------------------------------------
Grand Total..................................... 13,108 16,637 17,453 ........ ........ ........
----------------------------------------------------------------------------------------------------------------
\1\Average of loans outstanding over year.
[[Page 152]]
Table 8-8. APPROPRIATIONS ACTS LIMITATIONS ON CREDIT LOAN LEVELS
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
Estimate
Agency or Program 1995 -----------------------
Actual 1996 1997
----------------------------------------------------------------------------------------------------------------
LIMITATIONS ON DIRECT LOAN OBLIGATIONS
Funds Appropriated to the President:
Foreign military financing................................................ 558 544 370
Agriculture:\1\
Farm Service Agency:
Agricultural credit insurance fund...................................... 564 763 546
Rural Utilities Service:
Rural electric and telephone............................................ 1,320 1,426 1,620
Rural telephone bank.................................................... 175 175 175
Distance learning and medical link loans................................ .......... .......... 125
Rural development insurance fund\1\..................................... 1,131 .......... ..........
Rural water and waste disposal loans.................................... .......... 547 800
Rural Housing Service:
Rural housing insurance fund............................................ 1,472 1,223 1,668
Rural community facility loans.......................................... .......... 208 200
Rural Business--Cooperative Service:
Rural development loan fund............................................. 85 38 80
Rural economic development loans........................................ 13 14 14
Rural business and industry loans....................................... .......... .......... 50
Foreign Assistance Programs:
Public Law 480 direct credit............................................ 303 291 219
Housing and Urban Development:
FHA-General and special risk.............................................. 220 120 120
FHA-Mutual mortgage insurance............................................. 180 200 200
Interior:
Bureau of Reclamation direct loans........................................ 23 37 36
Indian direct loan........................................................ 11 .......... ..........
State Department:
Repatriation Loans........................................................ 1 1 1
Transportation:
Alameda Corridor project improvement...................................... .......... .......... 400
High priority corridors................................................... 40 .......... ..........
Orange County (CA) toll road.............................................. 100 20 ..........
Minority business resource center......................................... 15 15 15
Veterans Affairs:
Direct loans.............................................................. 1 .......... ..........
Vocational rehabilitation................................................. 2 2 2
FEMA--Disaster assistance................................................... 175 36 25
-----------------------------------
Total, limitations on direct loan obligations......................... 6,389 5,660 6,666
-----------------------------------
LIMITATIONS ON GUARANTEED LOAN COMMITMENTS
Funds Appropriated to the President:
Loan guarantees to Israel................................................. 2,000 2,000 2,000
Assistance for the New Independent States of the Former Soviet Union...... .......... 106 ..........
Agriculture:
Agricultural credit insurance fund........................................ 1,938 2,450 2,650
Rural development insurance fund.......................................... 575 50 ..........
Rural business and industry loan fund..................................... .......... 700 750
Rural housing insurance fund.............................................. 1,049 1,700 2,400
Rural community facility loan fund........................................ .......... 75 100
Education:
Historically black colleges/universities.................................. 357 .......... ..........
Health and Human Services:
Health professions graduate student loan insurance........................ 275 210 140
Housing and Urban Development:
FHA--General and special risk............................................. 20,885 17,400 17,400
FHA--Mutual mortgage insurance............................................ 100,000 110,000 110,000
Community development loan guarantees..................................... 2,054 1,500 2,000
Indian housing loan guarantee............................................. 22 37 37
[[Page 153]]
Interior:
Indian loan guaranty and insurance........................................ 47 35 35
-----------------------------------
Total, limitations on guaranteed loan commitments....................... 129,202 136,263 137,512
===================================
ADDENDUM
Secondary guaranteed loan commitment limitations:
GNMA, mortgage-backed securities.......................................... 142,000 110,000 110,000
----------------------------------------------------------------------------------------------------------------
\1\In 1995, this included water and waste, community facility, and business and industry funds.
[[Page 154]]
Table 8-9. DIRECT LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT----------
(in millions of dollars)
------------------------------------------------------------------------
Estimate
Agency or Program 1995 -------------------
actual 1996 1997
------------------------------------------------------------------------
Funds Appropriated to the President
International Security Assistance
Foreign military loan liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 461 30 9
Change in outstandings............... -716 -943 -886
Outstandings......................... 7,911 6,968 6,082
Foreign military financing direct loan
financing account:
Obligations.......................... 558 544 370
Loan disbursements................... 266 743 829
Change in outstandings............... 266 733 807
Outstandings......................... 539 1,272 2,079
Military debt reduction financing
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... 15 4
Change in outstandings............... .......... 15 4
Outstandings......................... .......... 15 19
Multilateral Assistance
International organizations and
programs:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -2 -2 -2
Outstandings......................... 36 34 32
Agency for International Development
Economic assistance loans--liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 11 13 ........
Change in outstandings............... -486 -599 -616
Outstandings......................... 13,279 12,680 12,064
Debt reduction, financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... 51 47
Change in outstandings............... -47 -6 -10
Outstandings......................... 453 447 437
Private sector revolving fund
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 -4 ........
Outstandings......................... 7 3 3
Microenterprise and other development
credit direct loan financing account:
Obligations.......................... 1 1 1
Loan disbursements................... .......... 3 1
Change in outstandings............... .......... 3 ........
Outstandings......................... 1 4 4
Overseas Private Investment Corporation
Overseas Private Investment Corporation
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -11 -5 -6
Outstandings......................... 28 23 17
Overseas private investment corporation
direct loan financing account:
Obligations.......................... 15 200 85
Loan disbursements................... 46 62 75
Change in outstandings............... 45 61 74
Outstandings......................... 53 114 188
Department of Agriculture
Farm Service Agency
Agricultural credit insurance fund
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 4 3 3
Change in outstandings............... -1,082 -1,174 -1,174
Outstandings......................... 10,426 9,252 8,078
Agricultural credit insurance fund
direct loan financing account:
Obligations.......................... 564 763 546
Loan disbursements................... 583 813 777
Change in outstandings............... 143 328 247
Outstandings......................... 1,655 1,983 2,230
Commodity credit corporation fund:\1\
Obligations.......................... 9,230 5,700 7,059
Loan disbursements................... 9,230 5,700 7,059
Change in outstandings............... -343 -665 186
Outstandings......................... 2,786 2,121 2,307
Rural Utilities Service
Rural communication development fund
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 -1 -1
Outstandings......................... 10 9 8
Distance learning and medical link
direct loan financing account:
Obligations.......................... .......... ........ 125
Loan disbursements................... .......... ........ 38
Change in outstandings............... .......... ........ 38
Outstandings......................... .......... ........ 38
Rural development insurance fund
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 65 29 24
Change in outstandings............... -127 -159 -158
Outstandings......................... 4,471 4,312 4,154
Rural electrification and telephone
direct loan financing account:
Obligations.......................... 1,320 1,426 1,620
Loan disbursements................... 830 1,192 1,275
Change in outstandings............... 787 1,155 1,208
Outstandings......................... 2,740 3,895 5,103
Rural telephone bank direct loan
financing account:
Obligations.......................... 175 175 175
Loan disbursements................... 37 223 179
Change in outstandings............... 33 220 176
Outstandings......................... 118 338 514
Rural development insurance fund direct
loan financing account:
Obligations.......................... 1,004 ........ ........
Loan disbursements................... 608 ........ ........
Change in outstandings............... 593 -1,218 ........
Outstandings......................... 1,218 ........ ........
Rural water and waste disposal loans
direct financing account:
Obligations.......................... .......... 547 800
Loan disbursements................... .......... 600 677
Change in outstandings............... .......... 1,567 655
Outstandings......................... .......... 1,567 2,222
[[Page 155]]
Rural electrification and telephone
revolving fund liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 432 227 178
Change in outstandings............... -998 -1,326 -1,153
Outstandings......................... 33,101 31,775 30,622
Rural telephone bank liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 36 33 33
Change in outstandings............... -45 -60 -61
Outstandings......................... 1,414 1,354 1,293
Rural Housing
Rural housing insurance fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 9 5 1
Change in outstandings............... -1,163 -1,233 -1,214
Outstandings......................... 23,675 22,442 21,228
Rural housing insurance fund direct loan
financing account:
Obligations.......................... 1,162 1,223 1,668
Loan disbursements................... 1,584 1,252 1,567
Change in outstandings............... 1,491 1,145 1,404
Outstandings......................... 6,797 7,942 9,346
Rural community facility loans direct
financing account:
Obligations.......................... .......... 208 200
Loan disbursements................... .......... 134 161
Change in outstandings............... .......... 366 149
Outstandings......................... .......... 366 515
Rural Business-Cooperative Service
Rural economic development liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... 1 ........
Change in outstandings............... -1 ........ -2
Outstandings......................... 8 8 6
Rural economic development loan direct
financing account:
Obligations.......................... 12 14 14
Loan disbursements................... 12 11 12
Change in outstandings............... 10 7 7
Outstandings......................... 30 37 44
Rural development loan fund direct loan
financing account:
Obligations.......................... 85 38 80
Loan disbursements................... 47 63 57
Change in outstandings............... 47 63 56
Outstandings......................... 74 137 193
Rural business and industry direct loans
financing account:
Obligations.......................... .......... ........ 50
Loan disbursements................... .......... ........ 12
Change in outstandings............... .......... ........ 12
Outstandings......................... .......... ........ 12
Rural development loan fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 5 3 2
Change in outstandings............... .......... -1 -2
Outstandings......................... 85 84 82
Foreign Agricultural Service
Expenses, Public Law 480, foreign
assistance programs, Agriculture
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -118 -272 -255
Outstandings......................... 10,697 10,425 10,170
P.L. 480 Direct credit financing
account:
Obligations.......................... 303 291 219
Loan disbursements................... 186 270 191
Change in outstandings............... 175 270 145
Outstandings......................... 1,024 1,294 1,439
P.L. 480 Title I Food for Progress
Credits, financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 52 ........ ........
Change in outstandings............... 52 ........ ........
Outstandings......................... 508 508 508
Debt reduction--financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 -1 -2
Outstandings......................... 66 65 63
Department of Commerce
Economic Development Administration
Economic development revolving fund
liquidating account :
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -7 -7 -6
Outstandings......................... 68 61 55
Department of Defense--Military
Revolving and Management Funds
Defense business operations fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -47 -49 -75
Outstandings......................... 1,433 1,384 1,309
Department of Education
Office of Postsecondary Education
Student financial assistance:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -136 2 3
Outstandings......................... 187 189 192
Higher education facilities loans:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -7 -6 -6
Outstandings......................... 55 49 43
College housing and academic facilities
loans liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 4 4 4
Change in outstandings............... 2 2 1
Outstandings......................... 138 140 141
College housing loans:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -35 -35 -32
Outstandings......................... 484 449 417
[[Page 156]]
College housing and academic facilities
direct loan financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 6 13 9
Change in outstandings............... 6 13 9
Outstandings......................... 7 20 29
Federal direct student loan program,
financing account:
Obligations.......................... 11,547 16,317 21,770
Loan disbursements................... 2,332 9,600 13,763
Change in outstandings............... 2,324 9,417 13,213
Outstandings......................... 2,801 12,218 25,431
Department of Energy
Power Marketing Administration
Bonneville Power Administration fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... ........ ........
Outstandings......................... 3 3 3
Department of Health and Human Services
Health Resources and Services
Administration
Health Resources and Services:
Obligations.......................... .......... ........ ........
Loan disbursements................... 17 17 18
Change in outstandings............... 266 3 4
Outstandings......................... 797 800 804
Health loan funds:
Obligations.......................... .......... ........ ........
Loan disbursements................... 2 1 1
Change in outstandings............... -19 -11 -10
Outstandings......................... 45 34 24
Department of Housing and Urban
Development
Public and Indian Housing Programs
Low-rent public housing--loans and other
expenses :
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -58 -62 -65
Outstandings......................... 1,689 1,627 1,562
Community Planning and Development
Revolving fund (liquidating programs):
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -58 -52 -46
Outstandings......................... 388 336 290
Community development loan guarantees
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -21 -20 -15
Outstandings......................... 89 69 54
Housing Programs
Nonprofit sponsor assistance liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... ........ ........
Outstandings......................... 1 1 1
Flexible Subsidy Fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... 126 159 56
Change in outstandings............... 125 157 54
Outstandings......................... 584 741 795
FHA mutual mortgage and cooperative
housing insurance funds liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -2 -2 -2
Outstandings......................... 15 13 11
FHA general and special risk insurance
funds liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -5 -6 -6
Outstandings......................... 107 101 95
FHA-General and special risk direct loan
financing account:
Obligations.......................... .......... 120 120
Loan disbursements................... .......... 120 120
Change in outstandings............... .......... 120 120
Outstandings......................... .......... 120 240
Housing for the elderly or handicapped
fund liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 7 192 ........
Change in outstandings............... -131 131 -63
Outstandings......................... 8,331 8,462 8,399
FHA-Mutual mortgage insurance direct
loan financing account:
Obligations.......................... .......... 200 200
Loan disbursements................... .......... 200 200
Change in outstandings............... .......... 200 199
Outstandings......................... .......... 200 399
Government National Mortgage Association
Guarantees of mortgage-backed securities
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 149 314 378
Change in outstandings............... -16 27 49
Outstandings......................... 333 360 409
Department of the Interior
Bureau of Reclamation
Bureau of reclamation loan liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... -3 -3
Outstandings......................... 83 80 77
Bureau of Reclamation direct loan
financing account:
Obligations.......................... 16 33 36
Loan disbursements................... 12 28 34
Change in outstandings............... 12 28 34
Outstandings......................... 31 59 93
Emergency fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 -1 -1
Outstandings......................... 6 5 4
[[Page 157]]
National Park Service
Construction:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 ........ -1
Outstandings......................... 7 7 6
Bureau of Indian Affairs
Revolving fund for loans liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -9 -7 -8
Outstandings......................... 67 60 52
Indian loan guaranty and insurance fund
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 3 4 4
Change in outstandings............... 3 ........ ........
Outstandings......................... 40 40 40
Indian direct loan financing account:
Obligations.......................... 11 ........ ........
Loan disbursements................... -14 ........ ........
Change in outstandings............... -5 -5 -3
Outstandings......................... 22 17 14
Insular Affairs
Assistance to territories:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -1 -1 -1
Outstandings......................... 21 20 19
Department of State
Administration of Foreign Affairs
Repatriation loans financing account:
Obligations.......................... 1 1 1
Loan disbursements................... .......... 1 1
Change in outstandings............... .......... 1 1
Outstandings......................... 1 2 3
Department of Transportation
Federal Highway Administration
Alameda corridor project direct loan
financing account:
Obligations.......................... .......... ........ 400
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... ........ ........
Outstandings......................... .......... ........ ........
Orange County (CA) toll road
demonstration project direct loan
financing account:
Obligations.......................... .......... ........ 24
Loan disbursements................... .......... ........ 24
Change in outstandings............... .......... ........ 25
Outstandings......................... .......... ........ 25
High priority corridors loan financing
account:
Obligations.......................... 40 ........ ........
Loan disbursements................... 37 ........ ........
Change in outstandings............... 37 ........ -37
Outstandings......................... 37 37 ........
Right-of-way revolving fund liquidating
account:
Obligations.......................... 43 ........ ........
Loan disbursements................... 26 24 25
Change in outstandings............... 2 -6 -5
Outstandings......................... 153 147 142
Federal Railroad Administration
Amtrak corridor improvement loans
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... -1 -1
Outstandings......................... 7 6 5
Amtrak corridor improvement direct loan
financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... 2 ........
Change in outstandings............... .......... 2 ........
Outstandings......................... 3 5 5
Railroad rehabilitation and improvement
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -3 -3 -3
Outstandings......................... 67 64 61
Railroad rehabilitation and improvement
direct loan financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 6 ........ ........
Change in outstandings............... 4 ........ ........
Outstandings......................... 4 4 4
Maritime Administration
Federal ship financing fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 8 50 50
Change in outstandings............... -185 42 43
Outstandings......................... 33 75 118
Office of the Secretary
Minority business resource center direct
loan financing account:
Obligations.......................... 15 15 15
Loan disbursements................... 9 21 15
Change in outstandings............... 2 ........ ........
Outstandings......................... 9 9 9
Department of the Treasury
Departmental Offices
Community development financial
institutions fund direct loan financing
account:
Obligations.......................... .......... 34 56
Loan disbursements................... .......... 7 25
Change in outstandings............... .......... 7 25
Outstandings......................... .......... 7 32
Department of Veterans Affairs
Veterans Benefits Administration
Guaranty and indemnity fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 4 ........ ........
Change in outstandings............... -9 -1 ........
Outstandings......................... 13 12 12
Direct loan revolving fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -3 -3 -3
Outstandings......................... 14 11 8
[[Page 158]]
Loan guaranty revolving fund liquidating
account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 24 ........ ........
Change in outstandings............... -100 -44 -44
Outstandings......................... 528 484 440
Vocational rehabilitation direct loan
financing account:
Obligations.......................... 2 2 2
Loan disbursements................... 2 2 2
Change in outstandings............... .......... ........ ........
Outstandings......................... 1 1 1
Education loan fund liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... ........ -1
Outstandings......................... 3 3 2
Loan guaranty direct loan financing
account:
Obligations.......................... 923 885 894
Loan disbursements................... 933 885 894
Change in outstandings............... 45 196 191
Outstandings......................... 473 669 860
Guaranty and indemnity direct loan
financing account:
Obligations.......................... 604 1,197 1,417
Loan disbursements................... 604 1,197 1,417
Change in outstandings............... 77 319 256
Outstandings......................... 227 546 802
Direct loan financing account:
Obligations.......................... 6 20 31
Loan disbursements................... 6 20 31
Change in outstandings............... 5 21 31
Outstandings......................... 6 27 58
Environmental Protection Agency
Environmental Protection Agency
Abatement, control, and compliance
direct loan liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 2 1 ........
Change in outstandings............... -7 -8 -9
Outstandings......................... 96 88 79
Abatement, control, and compliance
direct loan financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 21 10 6
Change in outstandings............... 17 5 1
Outstandings......................... 60 65 66
Small Business Administration
Small Business Administration
Business direct loan financing account:
Obligations.......................... 23 60 2,684
Loan disbursements................... 33 41 1,367
Change in outstandings............... 10 11 1,267
Outstandings......................... 126 137 1,404
Disaster direct loan financing account:
Obligations.......................... 1,311 932 1,260
Loan disbursements................... 1,811 923 1,057
Change in outstandings............... 1,748 734 797
Outstandings......................... 7,157 7,891 8,688
Disaster loan fund liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 5 ........ ........
Change in outstandings............... -277 -298 -252
Outstandings......................... 1,918 1,620 1,368
Business loan fund liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 199 226 159
Change in outstandings............... -530 -208 -229
Outstandings......................... 2,037 1,829 1,600
Other Independent Agencies
District of Columbia
Loans to the District of Columbia for
capital projects:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -12 -13 -12
Outstandings......................... 75 62 50
Repayable advances to the District of
Columbia direct loan financing account:
Obligations.......................... 147 379 ........
Loan disbursements................... 147 379 ........
Change in outstandings............... 147 232 -379
Outstandings......................... 147 379 ........
Export-Import Bank of the United States
Export-Import Bank of the United States
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... 193 140 102
Change in outstandings............... -520 -1,538 -829
Outstandings......................... 6,138 4,600 3,771
Debt reduction financing account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... 64 30
Change in outstandings............... .......... 64 30
Outstandings......................... .......... 64 94
Export-Import Bank direct loan financing
account:
Obligations.......................... 1,598 2,955 3,396
Loan disbursements................... 673 1,388 1,573
Change in outstandings............... 580 1,056 1,222
Outstandings......................... 1,407 2,463 3,685
Farm Credit System Financial Assistance
Corporation
Financial assistance corporation
assistance fund, liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -48 -41 -42
Outstandings......................... 1,010 969 927
Bank Insurance
Bank insurance fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -5 -19 ........
Outstandings......................... 132 113 113
FSLIC Resolution
FSLIC resolution fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... -31 -32 -31
Outstandings......................... 95 63 32
Federal Emergency Management Agency
Disaster assistance direct loan
liquidating account:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... -44 ........
Outstandings......................... 59 15 15
[[Page 159]]
Disaster assistance direct loan
financing account:
Obligations.......................... 140 36 25
Loan disbursements................... 44 112 25
Change in outstandings............... 14 89 -48
Outstandings......................... 90 179 131
National Credit Union Administration
Credit union share insurance fund:
Obligations.......................... .......... 2 2
Loan disbursements................... .......... 5 1
Change in outstandings............... -3 2 ........
Outstandings......................... .......... 2 2
Central liquidity facility:
Obligations.......................... .......... ........ ........
Loan disbursements................... .......... ........ ........
Change in outstandings............... .......... ........ ........
Outstandings......................... .......... ........ ........
Community development credit union
revolving loan fund:
Obligations.......................... .......... ........ ........
Loan disbursements................... 2 2 2
Change in outstandings............... .......... ........ ........
Outstandings......................... 5 5 5
Tennessee Valley Authority
Tennessee Valley Authority fund:
Obligations.......................... 45 55 106
Loan disbursements................... 45 55 106
Change in outstandings............... -6 2 31
Outstandings......................... 150 152 183
Total, Direct loan transactions:
Obligations.......................... 30,901 34,373 45,451
Loan disbursements................... 21,982 27,683 34,710
Change in outstandings............... 1,628 8,621 14,964
Outstandings......................... 163,323 171,944 186,908
------------------------------------------------------------------------
\1\CCC direct loans for crop price support, by law, are not subject to
credit reform treatment.
[[Page 160]]
Table 8-10. GUARANTEED LOAN TRANSACTIONS OF THE FEDERAL GOVERNMENT-----
(in millions of dollars)
------------------------------------------------------------------------
Estimate
Agency or Program 1995 -----------------------
actual 1996 1997
------------------------------------------------------------------------
Funds Appropriated to the President
International Security Assistance
Foreign military loan liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -536 -442 -395
Outstandings..................... 6,610 6,168 5,773
Agency for International Development
Loan guarantees to Israel financing
account:
Commitments...................... 1,783 1,940 2,000
New guaranteed loans............. 1,783 1,940 2,000
Change in outstandings........... 1,783 1,940 2,000
Outstandings..................... 5,346 7,286 9,286
Housing and other credit guaranty
programs liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 34 27 50
Change in outstandings........... -28 -45 -24
Outstandings..................... 2,009 1,964 1,940
Private sector revolving fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... .......... .......... -17
Outstandings..................... 19 19 2
Microenterprise and other
development guaranteed loan
financing account:
Commitments...................... 48 38 38
New guaranteed loans............. 4 20 36
Change in outstandings........... 4 19 35
Outstandings..................... 26 45 80
Housing and other credit guaranty
programs guaranteed loan financing
account:
Commitments...................... 148 41 42
New guaranteed loans............. 120 131 112
Change in outstandings........... 120 131 112
Outstandings..................... 179 310 422
Assistance for the New Independent
States of the Former Soviet Union:
Ukraine export credit insurance
financing account:
Commitments...................... .......... 106 ..........
New guaranteed loans............. .......... 90 16
Change in outstandings........... .......... 90 -35
Outstandings..................... .......... 90 55
Overseas Private Investment
Corporation
Overseas Private Investment
Corporation liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -69 -69 -61
Outstandings..................... 287 218 157
Overseas private investment
corporation guaranteed loan
financing account:
Commitments...................... 1,891 2,000 2,250
New guaranteed loans............. 575 1,627 1,765
Change in outstandings........... 561 1,602 1,465
Outstandings..................... 948 2,550 4,015
Department of Agriculture
Farm Service Agency
Agricultural credit insurance fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 3 .......... ..........
Change in outstandings........... -674 -317 -212
Outstandings..................... 1,316 999 787
Agricultural credit insurance fund
guaranteed loan financing account:
Commitments...................... 1,938 2,450 2,650
New guaranteed loans............. 1,878 1,922 2,573
Change in outstandings........... 1,029 827 1,296
Outstandings..................... 4,979 5,806 7,102
Commodity credit corporation export
guarantee financing account:
Commitments...................... 5,700 5,700 5,500
New guaranteed loans............. 2,518 5,700 5,500
Change in outstandings........... -5,888 3,091 2,048
Outstandings..................... 4,874 7,965 10,013
Commodity credit corporation
guaranteed loans liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -1,723 -114 -75
Outstandings..................... 206 92 17
Natural Resources Conservation
Service
Agricultural resource conservation
demonstration guaranteed loan
financing account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... .......... .......... ..........
Outstandings..................... 17 17 17
Rural Utilities Service
Rural communication development fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... .......... .......... ..........
Outstandings..................... 5 5 5
Rural development insurance fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 7 19 ..........
Change in outstandings........... -102 -94 -94
Outstandings..................... 602 508 414
Rural water and waste water disposal
guaranteed loan financing account:
Commitments...................... 475 50 ..........
New guaranteed loans............. 217 3 12
Change in outstandings........... 183 -484 12
Outstandings..................... 494 10 22
Rural electrification and telephone
revolving fund liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -17 -20 -22
Outstandings..................... 687 667 645
[[Page 161]]
Rural Housing Service
Rural housing insurance fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -5 -4 -3
Outstandings..................... 36 32 29
Rural housing insurance fund
guaranteed loan financing account:
Commitments...................... 1,049 1,700 2,400
New guaranteed loans............. 859 1,466 2,161
Change in outstandings........... 809 1,373 2,009
Outstandings..................... 2,085 3,458 5,467
Rural community facility loans
guaranteed financing account:
Commitments...................... .......... 75 100
New guaranteed loans............. .......... 40 45
Change in outstandings........... .......... 91 40
Outstandings..................... .......... 91 131
Rural Business-Cooperative Service
Rural business and industry loans
guaranteed financing account:
Commitments...................... .......... 700 750
New guaranteed loans............. .......... 515 638
Change in outstandings........... .......... 1,183 507
Outstandings..................... .......... 1,183 1,690
Department of Commerce
Economic Development Administration
Economic development revolving fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -11 -2 -1
Outstandings..................... 19 17 16
National Oceanic and Atmospheric
Administration
Fishing vessel obligations
guarantees financing account:
Commitments...................... 75 25 ..........
New guaranteed loans............. 32 25 ..........
Change in outstandings........... 5 19 -6
Outstandings..................... 54 73 67
Federal ship financing fund, fishing
vessels liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -21 .......... ..........
Outstandings..................... 142 142 142
Department of Education
Office of Postsecondary Education
Federal family education loan
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 19 19 5
Change in outstandings........... -6,801 -6,801 -5,188
Outstandings..................... 29,573 22,772 17,584
Federal family education loan
program, financing account:
Commitments...................... 19,603 20,433 19,114
New guaranteed loans............. 20,321 18,369 18,587
Change in outstandings........... 16,289 18,620 13,447
Outstandings..................... 56,557 75,177 88,624
Historically Black College and
University Capital financing--
Financing account:
Commitments...................... 357 .......... ..........
New guaranteed loans............. .......... 65 75
Change in outstandings........... .......... 64 74
Outstandings..................... .......... 64 138
Department of Health and Human
Services
Health Resources and Services
Administration
Health Resources and Services:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -2 -1 -1
Outstandings..................... 11 10 9
Health professions graduate student
loan guaranteed loan financing
account:
Commitments...................... 275 210 140
New guaranteed loans............. 275 210 140
Change in outstandings........... 274 207 132
Outstandings..................... 1,163 1,370 1,502
Health professions graduate student
loan insurance fund liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -64 -68 -73
Outstandings..................... 1,657 1,589 1,516
Health loan funds:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -48 -39 -31
Outstandings..................... 261 222 191
Department of Housing and Urban
Development
Public and Indian Housing Programs
Low-rent public housing--loans and
other expenses:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -281 -300 -325
Outstandings..................... 4,132 3,832 3,507
Indian housing loan guarantee--
financing account:
Commitments...................... 22 37 37
New guaranteed loans............. .......... 28 33
Change in outstandings........... .......... 28 33
Outstandings..................... .......... 28 61
Community Planning and Development
Revolving fund (liquidating
programs) :
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -4 -1 -1
Outstandings..................... 4 3 2
Community development loan
guarantees financing account:
Commitments...................... 1,844 1,500 2,000
New guaranteed loans............. 243 1,672 1,750
Change in outstandings........... 202 1,632 1,685
Outstandings..................... 317 1,949 3,634
Community development loan
guarantees liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 27 20 15
Change in outstandings........... -51 -50 -45
Outstandings..................... 246 196 151
[[Page 162]]
Housing Programs
FHA mutual mortgage and cooperative
housing insurance funds liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -22,543 -14,610 -10,526
Outstandings..................... 96,145 81,535 71,009
FHA general and special risk
insurance funds liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -5,025 -2,971 -2,210
Outstandings..................... 47,729 44,758 42,548
FHA-General and special risk
guaranteed loan financing account:
Commitments...................... 10,138 11,824 12,933
New guaranteed loans............. 9,622 9,971 10,741
Change in outstandings........... 9,229 3,515 5,417
Outstandings..................... 35,457 38,972 44,389
Mutual mortgage insurance guaranteed
loan financing account :
Commitments...................... 50,323 77,793 70,721
New guaranteed loans............. 40,142 51,543 58,592
Change in outstandings........... 37,831 30,358 28,530
Outstandings..................... 222,021 252,379 280,909
Government National Mortgage
Association
Guarantees of mortgage-backed
securities liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 63,727 94,440 81,575
Change in outstandings........... 18,858 25,749 9,354
Outstandings..................... 463,848 489,597 498,951
Guarantees of mortgage-backed
securities financing account:
Commitments...................... 142,000 110,000 110,000
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... .......... .......... ..........
Outstandings..................... .......... .......... ..........
Department of the Interior
Bureau of Indian Affairs
Indian loan guaranty and insurance
fund liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -43 -25 -19
Outstandings..................... 103 78 59
Indian guaranteed loan financing
account:
Commitments...................... 47 35 35
New guaranteed loans............. 67 43 50
Change in outstandings........... 55 32 34
Outstandings..................... 109 141 175
Department of Transportation
Federal Aviation Administration
Aircraft purchase loan guarantee
program:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -3 -2 ..........
Outstandings..................... 2 .......... ..........
Maritime Administration
Federal ship financing fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -166 -199 -179
Outstandings..................... 981 782 603
Maritime guaranteed loan (Title XI)
financing account:
Commitments...................... 418 571 800
New guaranteed loans............. 418 571 800
Change in outstandings........... 428 515 694
Outstandings..................... 742 1,257 1,951
Department of Veterans Affairs
Veterans Benefits Administration
Guaranty and indemnity fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -1,099 -1,102 -1,022
Outstandings..................... 16,569 15,467 14,445
Loan guaranty revolving fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -22,891 -8,466 -3,319
Outstandings..................... 15,774 7,308 3,989
Loan guaranty guaranteed loan
financing account:
Commitments...................... 1 1 1
New guaranteed loans............. 1 1 1
Change in outstandings........... 834 674 685
Outstandings..................... 836 1,510 2,195
Guaranty and indemnity guaranteed
loan financing account:
Commitments...................... 22,161 24,032 24,547
New guaranteed loans............. 22,161 24,032 24,547
Change in outstandings........... 20,213 21,462 21,716
Outstandings..................... 121,307 142,769 164,485
Small Business Administration
Small Business Administration
Pollution control equipment fund
liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -11 -9 -8
Outstandings..................... 95 86 78
Business guaranteed loan financing
account:
Commitments...................... 9,709 13,921 11,653
New guaranteed loans............. 8,402 10,413 11,864
Change in outstandings........... 5,611 6,607 6,789
Outstandings..................... 18,618 25,225 32,014
Business loan fund liquidating
account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 4 .......... ..........
Change in outstandings........... -1,804 -1,302 -1,030
Outstandings..................... 7,675 6,373 5,343
[[Page 163]]
Other Independent Agencies
Export-Import Bank of the United
States
Export-Import Bank of the United
States liquidating account:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 288 300 275
Change in outstandings........... -1,010 -1,193 -913
Outstandings..................... 4,010 2,817 1,904
Export-Import Bank guaranteed loan
financing account:
Commitments...................... 10,267 13,781 14,294
New guaranteed loans............. 7,854 8,455 9,618
Change in outstandings........... 1,990 423 323
Outstandings..................... 13,736 14,159 14,482
FSLIC Resolution
FSLIC resolution fund:
Commitments...................... .......... .......... ..........
New guaranteed loans............. .......... .......... ..........
Change in outstandings........... -360 .......... ..........
Outstandings..................... .......... .......... ..........
Tennessee Valley Authority
Tennessee Valley Authority fund:
Commitments...................... .......... .......... ..........
New guaranteed loans............. 1 .......... 1
Change in outstandings........... .......... .......... ..........
Outstandings..................... .......... .......... ..........
Subtotal, Guaranteed loans (gross):
Commitments...................... 280,272 288,963 282,005
New guaranteed loans............. 181,602 233,677 233,577
Change in outstandings........... 45,028 81,522 72,602
Outstandings..................... 1,190,618 1,272,140 1,344,742
Less, secondary guaranteed loans:\1\
GNMA guarantees of FmHA/VA/FHA
pools:
Commitments...................... -142,000 -110,000 -110,000
New guaranteed loans............. -63,727 -94,440 -81,575
Change in outstandings........... -18,858 -25,749 -9,354
Outstandings..................... -463,848 -489,597 -498,951
Total, primary guaranteed loans:\2\
Commitments...................... 138,272 178,963 172,005
New guaranteed loans............. 117,875 139,237 152,002
Change in outstandings........... 26,170 55,773 63,248
Outstandings..................... 726,770 782,543 845,791
------------------------------------------------------------------------
\1\Loans guaranteed by FHA, VA, or FmHA are included above. GNMA places
a secondary guarantee on these loans, so they are deducted here to
avoid double counting.
\2\When guaranteed loans result in loans receivable, they are shown in
the direct loan table.
[[Page 164]]
Table 8-11. LENDING AND BORROWING BY GOVERNMENT-SPONSORED ENTERPRISES (GSEs)
(In millions of dollars)
----------------------------------------------------------------------------------------------------------------
Estimate
Enterprise 1995 -------------------------
actual 1996 1997
----------------------------------------------------------------------------------------------------------------
LENDING
Student Loan Marketing Association...... Obligations..................... 11,021 10,553 10,441
New transactions................ 11,021 10,553 10,441
Net change...................... 3,565 -3,434 -1,866
Outstandings.................... 41,636 38,202 36,336
Federal National Mortgage Association:
Corporation Accounts.................. Obligations..................... 44,501 64,526 69,773
New transactions................ 44,574 63,686 67,815
Net change...................... 28,608 31,691 33,202
Outstandings.................... 250,374 282,065 315,267
Mortgage-backed securities............ Obligations..................... -51,497 129,045 129,247
New transactions................ 89,130 129,045 129,247
Net change...................... 36,073 58,802 54,204
Outstandings.................... 559,585 618,387 672,591
Farm Credit System:
Banks for cooperatives................ Obligations..................... 8,690 9,976 10,076
New transactions................ 8,690 9,976 10,076
Net change...................... 619 205 208
Outstandings.................... 2,273 2,478 2,686
Farm Credit Banks..................... Obligations..................... 22,036 22,103 22,436
New transactions................ 22,036 22,492 22,880
Net change...................... 345 568 542
Outstandings.................... 14,231 14,800 15,600
Agricultural credit banks............. Obligations..................... 42,644 44,000 45,000
New transactions................ 42,638 44,000 45,000
Net change...................... 1,357 569 800
Outstandings.................... 14,231 14,800 15,600
Federal Home Loan Bank system:
Federal home loan banks............... Obligations..................... 724,349 725,000 725,000
New transactions................ 724,349 725,000 725,000
Net change...................... 5,561 -1,628 ...........
Outstandings.................... 122,128 120,500 120,500
Federal Home Loan Mortgage Corporation:
Corporation accounts.................. Obligations..................... 37,389 48,876 41,615
New transactions................ 37,389 48,876 41,615
Net change...................... 28,373 32,502 24,854
Outstandings.................... 95,052 127,554 152,408
Participation certificate pools....... Obligations..................... 70,071 110,877 108,540
New transactions................ 70,071 110,877 108,540
Net change...................... -6,626 21,017 30,493
Outstandings.................... 457,046 478,063 508,556
Subtotal, lending (gross)........... Obligations..................... 909,204 1,164,956 1,162,128
New transactions................ 1,049,898 1,164,505 1,160,614
Net change...................... 97,875 140,292 142,437
Outstandings.................... 1,578,860 1,719,152 1,861,589
Less guaranteed loans held as direct
loans by:
Federal National Mortgage Association. Net change...................... 2,247 -346 -122
Outstandings.................... 23,027 22,681 22,559
Student Loan Marketing Association\1\. Net change...................... 3,565 -3,434 -1,866
Outstandings.................... 41,636 38,202 36,336
Other................................. Net change...................... 3,405 ........... ...........
Outstandings.................... 7,860 7,860 7,860
-----------------------------------------------------------------------
Total GSE lending (net)............. Obligations..................... 909,204 1,164,956 1,162,128
New transactions................ 1,049,898 1,164,505 1,160,614
Net change...................... 88,658 144,072 144,425
Outstandings.................... 1,506,337 1,650,409 1,794,834
BORROWING
Student Loan Marketing Association\1\... Net change...................... 1,980 -5,915 -1,558
Outstandings.................... 51,672 45,757 44,199
Federal National Mortgage Association... Net change...................... 73,945 91,506 90,068
Outstandings.................... 836,777 928,283 1,018,351
Farm Credit System:
Banks for cooperatives................ Net change...................... 759 -7 -32
Outstandings.................... 2,458 2,451 2,419
Farm credit banks..................... Net change...................... 922 734 1,083
Outstandings.................... 39,041 39,775 40,858
Agricultural credit banks............. Net change...................... 1,583 465 884
Outstanding..................... 15,319 15,784 16,668
Federal Housing Finance Board:
Federal home loan banks............... Net change...................... 63,027 -9,406 ...........
Outstandings.................... 226,406 217,000 217,000
The Financing Corporation............. Net change...................... 1 1 2
Outstandings.................... 8,141 8,142 8,144
Resolution Funding Corporation........ Net change...................... -3 -2 -2
[[Page 165]]
Outstandings.................... 30,076 30,074 30,072
Federal Home Loan Mortgage Corporation.. Net change...................... 21,038 50,536 62,449
Outstandings.................... 568,656 619,192 681,641
Subtotal, borrowing (gross)......... Net change...................... 163,252 127,912 152,894
Outstandings.................... 1,778,546 1,906,458 2,059,352
Less borrowing from other GSEs.......... Net change...................... -3,421 ........... ...........
Outstandings.................... 36,387 36,387 36,387
Less investment in Federal Securities... Net change...................... -1,375 1,712 491
Outstandings.................... 8,674 10,386 10,877
Less borrowing for guaranteed loans held
as direct loans by:
Federal National Mortgage Association. Net change...................... 2,247 -346 -122
Outstandings.................... 23,027 22,681 22,559
Student Loan Marketing Association\1\. Net change...................... 3,565 -3,434 -1,866
Outstandings.................... 41,636 38,202 36,336
Other................................. Net change...................... 3,935 ........... ...........
Outstandings.................... 7,860 7,860 7,860
-----------------------------------------------------------------------
Total GSE borrowing (net)........... Net change...................... 158,301 129,980 154,391
Outstandings.................... 1,660,962 1,790,942 1,945,333
----------------------------------------------------------------------------------------------------------------
\1\All SLMA loans shown in the table above are guaranteed by the Federal Government and therefore also counted
as guaranteed loans.