[Appendix]
[Estimates for Government-Sponsored Enterprises]
[From the U.S. Government Printing Office, www.gpo.gov]
[[Page 1155]]
GOVERNMENT-SPONSORED ENTERPRISES
This chapter contains descriptions of and data on the Government-
sponsored enterprises listed below. These enterprises were established
and chartered by the Federal Government. They are not included in the
Federal budget because they are classified as being private. However,
because of their relationship to the Government, detailed statements of
financial operations and condition are presented, to the extent such
information is available, on a basis that is as consistent as
practicable with the basis for the budget data of Government agencies.
These statements are not reviewed by the President; they are presented
as submitted by the enterprises.
--The Student Loan Marketing Association is a for-profit financial
corporation chartered by Congress in 1972 under the Higher
Education Act (HEA) to help increase the availability of student
loans. Sallie Mae carries out secondary market and other
functions.
--The College Construction Loan Insurance Association is organized
as a private, for-profit insurance corporation to guarantee and
insure bonds and loans made for construction and renovation of
college and university facilities. The Corporation was
established by, but was not chartered by, the Federal
Government.
--The Federal National Mortgage Association provides supplementary
assistance to the secondary market for home mortgages. The
Federal Home Loan Mortgage Corporation provides a secondary
market for mortgage lenders. Both are supervised by the
Department of Housing and Urban Development for their roles in
helping to finance low- and moderate-income housing; both are
regulated for financial safety and soundness by the Office of
Federal Housing Enterprise Oversight.
--The Banks for Cooperatives, Agricultural Credit Bank, and Farm
Credit Banks provide financial assistance to agriculture. They
are supervised by the Farm Credit Administration.
--The Federal Agricultural Mortgage Corporation, under the
supervision of the Farm Credit Administration, provides a
secondary mortgage market for agricultural real estate and
certain rural housing loans as well as for farm and business
loans guaranteed by the U.S. Department of Agriculture.
--The Federal Home Loan Banks assist thrift institutions, banks,
insurance companies, and credit unions in providing financing
for housing and community development and are supervised by the
Federal Housing Finance Board.
--The Financing Corporation functions as a financing vehicle for the
FSLIC Resolution Fund. It operates under the supervision and
control of the Federal Housing Finance Board.
--The Resolution Funding Corporation provides financing for the
Resolution Trust Corporation (RTC) and is subject to the general
oversight and direction of the Thrift Depositor Protection
Oversight Board.
The Board of Governors of the Federal Reserve System is not a
Government-sponsored enterprise, but its transactions also are not
included in the budget because of its unique status in the conduct of
monetary policy. The Board provides data on its administrative budget on
a calendar year basis, which is included here for information. Its
budget schedules and statements are not subject to review by the
President.
DEPARTMENT OF EDUCATION
Student Loan Marketing Association
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Interest expense................ 2,690 2,555 2,683
00.02 Administrative expenses and
taxes......................... 510 466 489
--------- --------- ----------
00.91 Total operating expenses...... 3,200 3,021 3,172
Capital investment:
01.01 Loans, etc...................... 9,984 9,845 9,190
01.02 Investments, dividends, and
other assets.................. 845 700 650
--------- --------- ----------
01.91 Total capital investment...... 10,829 10,545 9,840
--------- --------- ----------
10.00 Total obligations............... 14,029 13,566 13,012
----------------------------------------------------------------------------
Budgetary resources available for obligation:
22.00 New budget authority (gross)...... 14,029 13,566 13,012
23.95 New obligations................... -14,029 -13,566 -13,012
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Authority to borrow (indefinite).. -6,707 -1,434 -1,488
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 20,736 15,000 14,500
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 14,029 13,566 13,012
----------------------------------------------------------------------------
Change in unpaid obligations:
72.91 Unpaid obligations, start of year:
Obligated balance: U.S.
Securities: Par value........... 1,201 1,291 1,253
73.10 New obligations................... 14,029 13,566 13,012
73.20 Total outlays (gross)............. -13,940 -13,604 -12,950
74.91 Unpaid obligations, end of year:
Obligated balance: U.S.
Securities: Par value........... 1,291 1,253 1,315
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 13,940 13,604 12,950
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -20,736 -15,000 -14,500
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. -6,707 -1,434 -1,488
90.00 Outlays........................... -6,796 -1,396 -1,550
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 9,984 9,845 9,190
--------- --------- ----------
1150 Total direct loan obligations... 9,984 9,845 9,190
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 41,636 37,391 35,572
1231 Disbursements: Direct loan
disbursements................... 9,984 9,845 9,190
Repayments:
1251 Repayments and prepayments...... -9,713 -5,670 -5,237
1252 Proceeds from loan asset sales
to the public or discounted... -4,522 -6,000 -6,000
1264 Write-offs for default: Other
adjustments, net................ 6 6 7
--------- --------- ----------
[[Page 1156]]
1290 Outstanding, end of year........ 37,391 35,572 33,532
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The Student Loan Marketing Association (Sallie Mae), a shareholder-
owned corporation, was created by the Education Amendments of 1972 to
expand funds available for student loans by providing liquidity to
lenders engaged in the Federal Family Education Loan Program (FFELP),
formerly the guaranteed student loan program (GSLP).
Sallie Mae provides liquidity through direct purchase of insured
student loans from eligible lenders and through warehousing advances,
which are loans to lenders secured by insured student loans, Government
or agency securities, or other acceptable collateral. In capital
shortage areas, Sallie Mae is authorized, at the request of Federal
officials, to make insured loans directly to students. Sallie Mae is
authorized to advance funds to State agencies that will provide loans to
students. Sallie Mae is also authorized to provide a secondary market
for noninsured loans; to serve as a guarantee agency in support of loan
availability at the request of the Secretary of Education; to purchase
and underwrite student loan revenue bonds; to provide certain additional
services as determined by its board of directors to be supportive of the
credit needs of students generally; and to provide financing for
academic facilities and equipment.
Sallie Mae is authorized by the Health Professions Educational
Assistance Act of 1976 to provide a secondary market for federally
insured loans to graduate health professions students.
Operations.--The forecast data with respect to operations are based
on certain general economic and specific FFELP loan volume assumptions
and should not be relied upon as an official forecast of the
corporation's future business.
ANNUAL LOAN ACTIVITY
[In millions of dollars]
1996 actual 1997 est. 1998 est.
Guaranteed student loans:
Stafford (formerly ``regular''):
Purchased....................... 5,956 6,620 6,124
Warehoused...................... 1,721 1,000 1,000
PLUS/SLS: Purchased............... 682 758 701
------------------------------------
Subtotal, Guaranteed student
loans....................... 8,359 8,378 7,825
Health professions loans: Purchased. 366 407 376
Other............................... 1,259 1,060 989
------------------------------------
Total......................... 9,984 9,845 9,190
====================================
Financing.--Between 1974 and early 1982, Sallie Mae borrowed through
the Federal Financing Bank. The Secretary of Education was authorized by
the Education Amendments of 1980 to guarantee principal and interest on
such obligations issued prior to October 1, 1985. Under an agreement
with the Department of the Treasury reached in early 1981, Sallie Mae
began borrowing directly in the private capital markets. Its last
borrowing through the FFB and its last issuance of federally guaranteed
obligations occurred in January 1982. During the first quarter of 1994,
Sallie Mae prepaid all of the outstanding FFB debt. Its obligations
today have certain characteristics, provided by charter, which give them
``agency'' status, but they are not federally insured or guaranteed.
Management.--At its annual meeting in May 1996, the shareholders of
Sallie Mae elected 14 members to its board of directors to serve until
the next annual meeting. Sallie Mae is entitled to elect 14 members to
the board. Pursuant to the Education Amendments of 1972, seven public
directors are appointed by the President, who also names the chairman
from among the 21 members.
Restructuring.--On September 30, 1996, the President signed
legislation that authorizes Sallie Mae to restructure as a fully
private, state chartered corporation. The legislation calls for Sallie
Mae's shareholders to vote on restructuring within 18 months of
enactment of this authorizing legislation. Under the restructuring,
currently outstanding Sallie Mae debt will retain the characteristics of
government sponsored enterprise (GSE) debt, as will debt issued by the
GSE subsidiary of the new private company during a wind down period that
ends in 2008. New business activities conducted outside of the GSE will
not be financed by GSE debt.
If the shareholders vote not to authorize the restructuring, Sallie
Mae is required to submit a plan by July 1, 2007, for winding up its GSE
activities by July 1, 2013, on which day Sallie Mae would cease to
exist.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 3,959
0102 Expense........................... -3,481
------------ -------------- ------------ -------------
0109 Net income........................ 478
-----------------------------------------------------------------------------------------------
Note.--The Sallie Mae Board of Directors does not consider it
appropriate to forecast corporate revenue in a public document since
such forecasts could be used for speculative purposes.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Federal assets:
Investments in US securities:
1102 Treasury securities, par...... 1,173 1,281 1,243 1,305
1104 Agency securities, par........ 29 10 10 10
1106 Receivables, net.............. 855 852 894 939
Non-Federal assets:
1201 Investments in non-Federal
securities, net............... 9,907 6,971 7,345 7,682
1206 Receivables, net................ 326 483 507 532
1207 Advances and prepayments........ 13 15 15 16
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 41,739 37,538 35,712 33,664
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -103 -147 -140 -132
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 41,636 37,391 35,572 33,532
Other Federal assets:
1801 Cash and other monetary assets.. 37 35 37 39
1803 Property, plant and equipment,
net........................... 179 246 259 272
1901 Other assets.................... 144 100 105 110
------------ -------------- ------------ -------------
1999 Total assets.................... 54,299 47,384 45,987 44,437
LIABILITIES:
Non-Federal liabilities:
2202 Interest payable................ 582 472 495 520
2203 Debt............................ 51,672 44,964 43,448 41,771
2206 Pension and other actuarial
liabilities................... 14 15 15 16
2207 Other........................... 746 916 961 1,009
------------ -------------- ------------ -------------
2999 Total liabilities............... 53,014 46,367 44,919 43,316
NET POSITION:
3200 Invested capital.................. 1,284 1,017 1,068 1,121
------------ -------------- ------------ -------------
3999 Total net position.............. 1,284 1,017 1,068 1,121
------------ -------------- ------------ -------------
4999 Total liabilities and net position 54,298 47,384 45,987 44,437
-----------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
11.1 Personnel compensation: Full-time
permanent....................... 53 45 47
12.1 Civilian personnel benefits....... 14 11 12
21.0 Travel and transportation of
persons......................... 5 4 4
23.3 Communications, utilities, and
miscellaneous charges........... 4 4 4
[[Page 1157]]
25.1 Advisory and assistance services.. 15 13 13
25.2 Other services.................... 234 197 207
31.0 Equipment......................... 8 6 7
33.0 Loans............................. 9,984 9,845 9,190
43.0 Interest, dividends, and taxes.... 3,712 3,441 3,528
--------- --------- ----------
99.9 Total obligations............... 14,029 13,566 13,012
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College Construction Loan Insurance Association
The College Construction Loan Insurance Association (Connie Lee) was
authorized by Public Law 99-498 on October 17, 1986. The Corporation was
created to insure and reinsure bonds and loans of educational
institutions which borrow funds to finance the acquisition,
construction, or renovation of their facilities. The Association was
incorporated in February 1987, under the District of Columbia Business
Corporation Act.
Connie Lee's authorizing statute stated that ``no obligation which
is insured, guaranteed, or otherwise backed by the corporation, shall be
deemed to be an obligation which is guaranteed by the full faith and
credit of the United States.''
Operations.--Connie Lee is structured to operate as a private
corporation, subject to the same state laws and regulations as any other
insurance company. Accordingly, Connie Lee secures insurance licenses in
each of the various states in which it expects to conduct its insurance
activities.
The Board of Directors authorized management to begin activities as
a reinsuror of educational facilities bonds in 1988. Connie Lee
reinsured its first bonds in December 1988. In fiscal year 1996, Connie
Lee insured $2,041 million of debt service on bonds benefitting
colleges, universities and teaching hospitals. Connie Lee also provided
reinsurance on bonds representing $5 million of debt service.
INSURANCE AND REINSURANCE ACTIVITY
[In thousands of
dollars]
1996 actual
Debt service insured:
Direct insurance................................. 2,041,502
Reinsurance...................................... 5,210
--------------------
Total.......................................... 2,046,712
Financing.--In order to provide capitalization, the Secretary of
Education, the Student Loan Marketing Association (Sallie Mae), and
other investors were authorized to purchase stock in the corporation.
Sallie Mae made an initial investment of $2 million in Connie Lee stock
in fiscal year 1987. The Secretary of Education purchased $19.1 million
in Connie Lee stock with funds appropriated for this purpose in fiscal
year 1988. Subsequently, the corporation sold an additional $50.9
million of equity securities to Sallie Mae, increasing total capital of
the corporation to $72.0 million. At the end of 1991, Connie Lee placed
equity securities with private investors, providing sufficient
incremental capital to obtain a triple-A credit rating necessary to
engage in the financial guaranty business as a direct writer of
insurance.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-9931-0-3-502 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 22 22
0102 Expense........................... -12 -11
------------ -------------- ------------ -------------
0109 Net income........................ 10 11
-----------------------------------------------------------------------------------------------
Management.--Connie Lee is governed by an eleven-member board of
directors comprised of two directors appointed by the Secretary of the
Treasury; two directors appointed by the Secretary of Education; three
directors appointed by the Student Loan Marketing Association; and four
directors elected by the corporation's shareholders, one of whom must be
an administrator of a college or university.
Privatization.--Legislation was enacted in 1996 that privatizes
Connie Lee by repealing its enabling legislation and requiring the
Federal Government to sell, and Connie Lee to purchase, the
corporation's federally owned stock. This sale will occur during fiscal
year 1997, and proceeds will be used to finance public elementary and
secondary school facility construction and repair within the District of
Columbia. Data on the corporation's financial position at the time of
the stock sale will be published in the President's Budget for FY 1999.
The corporation will continue to insure debt of educational
institutions, including Historically Black Colleges and Universities and
academic institutions that have lower investment-grade credit ratings.
Without the Federal restrictions previously imposed by legislation, the
corporation will be able to guarantee bonds in other market sectors and
diversify into new products and services.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-9931-0-3-502 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Federal assets:
Investments in US securities:
1102 Treasury securities, par...... 25 42
1104 Agency securities, par........ 30 21
Non-Federal assets:
1201 Investments in non-Federal
securities, net............... 142 155
1206 Receivables, net................ 8 9
1207 Advances and prepayments........ 30 37
Other Federal assets:
1801 Cash and other monetary assets.. 6 3
1803 Property, plant and equipment,
net........................... 1 1
------------ -------------- ------------ -------------
1999 Total assets.................... 242 268
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 7 9
2201 Non-Federal liabilities: Accounts
payable......................... 80 94
------------ -------------- ------------ -------------
2999 Total liabilities............... 87 103
NET POSITION:
3200 Invested capital.................. 155 165
------------ -------------- ------------ -------------
3999 Total net position.............. 155 165
------------ -------------- ------------ -------------
4999 Total liabilities and net position 242 268
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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
Federal National Mortgage Association
portfolio programs
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Interest on borrowings from the
public........................ 19,659 22,126 25,444
00.02 Other costs..................... 3,120 2,855 3,011
--------- --------- ----------
00.91 Total operating expenses...... 22,779 24,981 28,455
Capital investment:
01.01 Mortgage purchases and loans.... 71,234 67,488 77,724
01.02 Lease-Purchase Discounts........ -129
--------- --------- ----------
01.91 Total capital investment...... 71,105 67,488 77,724
--------- --------- ----------
10.00 Total obligations............... 93,884 92,469 106,179
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 406,165 464,639 484,339
22.00 New budget authority (gross)...... 152,358 112,169 146,721
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 558,523 576,808 631,060
23.95 New obligations................... -93,884 -92,469 -106,179
[[Page 1158]]
24.47 Unobligated balance available, end
of year: Authority to borrow.... 464,639 484,339 524,881
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.10 Authority to borrow............... 99,682 81,253 115,011
67.15 Net increase or decrease in
unlimited borrowing authorities. -3 -3 -3
--------- --------- ----------
67.90 Authority to borrow (total)..... 99,679 81,250 115,008
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 52,679 30,919 31,713
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 152,358 112,169 146,721
----------------------------------------------------------------------------
Change in unpaid obligations:
Unpaid obligations, start of year:
Obligated balance:
72.47 Corporate borrowing authority. -39,959 -47,738 -57,179
72.90 Fund balance.................. 48,071 54,604 63,193
--------- --------- ----------
72.99 Total unpaid obligations,
start of year............... 8,112 6,866 6,014
73.10 New obligations................... 93,884 92,469 106,179
73.20 Total outlays (gross)............. -95,130 -93,322 -105,909
Unpaid obligations, end of year:
Obligated balance:
74.47 Corporate borrowing authority. -47,738 -57,179 -64,601
74.90 Fund balance.................. 54,604 63,193 70,885
--------- --------- ----------
74.99 Total unpaid obligations, end
of year..................... 6,866 6,014 6,284
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 52,674 30,919 31,710
86.98 Outlays from permanent balances... 42,456 62,403 74,199
--------- --------- ----------
87.00 Total outlays (gross)........... 95,130 93,322 105,909
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
Offsetting collections (cash)
from:
88.00 Federal sources............... -130 -130 -130
88.40 Non-Federal sources........... -52,549 -30,789 -31,583
--------- --------- ----------
88.90 Total, offsetting
collections (cash)........ -52,679 -30,919 -31,713
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 99,679 81,250 115,008
90.00 Outlays........................... 42,451 62,403 74,196
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 63,858 68,312 78,229
--------- --------- ----------
1150 Total direct loan obligations... 63,858 68,312 78,229
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 250,374 293,037 330,600
Disbursements:
1231 Direct loan disbursements....... 66,802 67,301 77,506
1232 Purchase of loans assets from
the public.................... 4,432 188 219
1251 Repayments: Repayments and
prepayments..................... -26,596 -29,926 -37,726
1264 Write-offs for default: Other
adjustments, net................ -1,975
--------- --------- ----------
1290 Outstanding, end of year........ 293,037 330,600 370,599
---------------------------------------------------------------------------
The Federal National Mortgage Association, (Fannie Mae) is a
federally-chartered, privately-owned company with a public mission to
play a leadership role in mortgage finance, to improve the liquidity of
the residential mortgage market and increase the availability of
mortgage credit to low-and moderate income families and areas
underserved by private lending institutions. In carrying out its
mission, Fannie Mae engages primarily in two forms of business:
investing in portfolios of residential mortgages and guaranteeing
residential mortgage securities. As of September 30, 1996, Fannie Mae
held a net mortgage portfolio totaling $277 billion and had outstanding
guaranteed mortgage-backed securities of over $636 billion. Fannie Mae's
portfolio purchases and MBS finance about one of every five mortgages in
the country.
Through a federal charter, Congress has equipped Fannie Mae with
certain attributes to help it carry out its public mission and help
lower the cost of homeownership for low- and moderate-income homebuyers.
These include an exemption from state and local taxes (except real
property taxes), an exemption of its debt and mortgage securities from
Securities and Exchange Commission registration requirements, and
potential access to U.S. Treasury funds. Fannie Mae's charter also
prohibits the imposition of user fees. Fannie Mae pays federal income
tax; its earnings as of third quarter suggest the company will pay over
$1 billion for 1996. Securities guaranteed by Fannie Mae and debt issued
by the company are solely the corporation's obligations and are not
backed by the full faith and credit of the U.S. Government. The common
stock of the corporation is owned by the public, if fully transferable,
and trades on the New York, Midwest, and Pacific stock exchanges.
Fannie Mae was established in 1938 to assist private markets in
providing a steady supply of funds for housing. Fannie Mae was
originally a subsidiary of the Reconstruction Finance Corporation and
was permitted to purchase only loans insured by the Federal Housing
Administration (FHA). In 1954, Fannie Mae was restructured as a mixed
ownership (part government, part private) corporation. Congress sold the
government's remaining interest in Fannie Mae in 1968 and completed the
transformation to private shareholder ownership in 1970. Using the
proceeds from the sale of subordinated debentures, Fannie Mae paid the
Treasury $216 million for the government's preferred stock, which was
retired, and for the Treasury's interest in the corporation's earned
surplus. As a result, the corporation was taken off the federal budget.
In 1992, Congress reaffirmed and clarified Fannie Mae's role in the
housing finance system through charter act amendments included in the
Federal Housing Enterprises Financial Safety and Soundness Act of 1992
(``The Act''). Fannie Mae's charter purposes, as amended by the Act,
are: ``to provide stability in the secondary market for residential
mortgages; respond appropriately to the private capital market; provide
ongoing assistance to the secondary market for residential mortgages
(including activities relating to mortgages on housing for low- and
moderate-income families involving a reasonable economic return that may
be less than the return earned on other activities); and promote access
to mortgage credit throughout the Nation (including central cities,
rural areas, and underserved areas) by increasing the liquidity of
mortgage investments and improving the distribution of investment
capital for residential mortgage financing.''
Fannie Mae's primary customers are low-, moderate-, and middle-
income families. In March of 1994, the company established its ``$1
Trillion Initiative'' to provide mortgage financing for low- and
moderate-income families in underserved markets. At year-end 1996, the
company had provided $269 billion in financing for $3.6 million targeted
households, including 660,000 minority families, 1.5 million residents
in central cities, and 723,000 first-time homebuyers. In addition, the
company opened 25 new Partnership Offices in communities around the
country; these offices work with local governments, lenders, nonprofit
organizations, and neighborhood leaders to tailor affordable housing
programs to each community's needs.
On December 1, 1995, the U.S. Department of Housing and Urban
Development issued a final rule that sets the levels of the affordable
housing goals for 1996-1999 and es-
[[Page 1159]]
tablishes the requirements for counting mortgage purchases to low- and
moderate-income families and families living in underserved areas with
specific census tract and minority concentration requirements. Under the
new regulations, the low- and moderate-income target for 1996 is 40
percent, increasing to 42 percent for years 1997-1999; the underserved
area goal for 1996 is 21 percent, increasing to 24 percent for the 1997-
1999 period. In addition, the special affordable housing goal requires
the corporation to target 12 percent of its conventional mortgage
business in 1996 and 14 percent in 1997-1999 to very low-income families
or low-income families in low-income areas; those amounts must include
qualifying special affordable purchases on multifamily units totaling
not less than $1.29 billion for each year. Fannie Mae exceeded its
housing goals for 1994 and 1995, and expects to meet or exceed all of
its goals for 1996.
The Act also established the Office of Federal Housing Enterprise
Oversight (OFHEO), an independent office within HUD, headed by a
Director who reports directly to the Congress. OFHEO has statutory
responsibility for ensuring that Fannie Mae is adequately capitalized
and operating in a safe and sound manner. Included among the express
statutory authorities of the Director is the authority to conduct
examinations of the financial health of the company and to issue minimum
and risk-based capital standards. The minimum capital requirements are
computed from statutorily established ratios that are applied to the
assets and off-balance sheet risks of Fannie Mae. The risk-based capital
standard determines the amount of capital that Fannie Mae must hold to
withstand the impact of simultaneous adverse credit and interest rate
stresses over a 10-year period, plus an additional amount to cover
management and operations risk. Total capital (shareholder's equity plus
allowance for loan losses) at the end of September 1996 was $13.0
billion. The company has continued to remain in compliance with
applicable capital standards and has been deemed adequately capitalized
by OFHEO since its first classification in June 1993.
Fannie Mae has pursued its housing mission vigorously and
productively while continuing to maintain its financial strength. It
provides liquidity and stability to the mortgage market. It also passes
on reduced mortgage interest rates to homebuyers--according to some
studies between 25 and 50 basis points. Meanwhile, Fannie Mae has
remained profitable. Through the third quarter of 1996, it earned $2.01
billion in net income. The company also completed the financial
restructuring plan it announced at the end of 1995, which included stock
repurchase plans totaling $1 billion and a $350 million contribution to
the Fannie Mae foundation for expanding homeownership.
The forecast data contained in this material has been developed
based on certain general economic assumptions prevalent in the third
quarter of 1996 and should not be construed as an official forecast for
Fannie Mae.
Income and retained earnings for the years ended September 30, 1995
and 1996 follow (in thousands of dollars):
1995 actual 1996 actual
Gross revenue........................... 21,408,700 24,404,500
Gross expenses.......................... 18,190,200 21,008,700
------------- --------------
Income before Federal income tax...... 3,218,500 3,395,800
Federal income tax...................... 930,100 1,000,300
------------- --------------
Net income............................ 2,288,400 2,395,500
Retained earnings, beginning of year.... 7,545,000 9,123,000
Dividends on common stock............... -710,400 -800,200
------------- --------------
Retained earnings, end of year........ 9,123,000 10,718,300
------------- --------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Federal assets:
1101 Fund balances with Treasury..... 221 650
Investments in US securities:
1102 Treasury securities, par...... 22 21
1104 Other......................... 47,828 53,933 63,209 70,904
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Public: direct loans (net of
discount)..................... 231,960 267,105 307,739 347,980
1602 Federal Agencies................ 8,545 10,164 3,709 3,406
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -287 -253 -233 -227
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 240,218 277,016 311,215 351,159
Other Federal assets:
1801 Cash and other monetary assets.. 5,763 6,725 7,472 8,455
1803 Property, plant and equipment,
net........................... 177 190
------------ -------------- ------------ -------------
1999 Total assets.................... 294,229 338,535 381,896 430,518
LIABILITIES:
Federal liabilities:
2101 Accounts payable................ 349 550
2102 Accrued interest payable........ 3,712 4,429 5,499 6,242
2105 Other........................... 5 6
Non-Federal liabilities:
2203 Debt............................ 277,192 319,153 359,996 406,260
2204 Estimated Federal liability for
loan guarantees, credit reform 2,028 1,936 3,411 3,694
2206 Pension and other actuarial
liabilities................... 157 178
2207 Subtotal, Federal taxes payable. 65 15
------------ -------------- ------------ -------------
2999 Total liabilities............... 283,508 326,267 368,906 416,196
NET POSITION:
3300 Cumulative results of operations.. 10,721 12,267 12,990 14,322
------------ -------------- ------------ -------------
3999 Total net position.............. 10,721 12,267 12,990 14,322
------------ -------------- ------------ -------------
4999 Total liabilities and net position 294,229 338,534 381,896 430,518
-----------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
21.0 Travel and transportation of
persons......................... 14 14 15
23.3 Communications, utilities, and
miscellaneous charges........... 11 11 12
24.0 Printing and reproduction......... 5
25.1 Advisory and assistance services.. 95 89 97
Other services:
25.2 Other services--Non-Federal
employment compensation....... 310 354 388
25.2 Other services.................. 1,785 1,454 1,462
26.0 Supplies and materials............ 4
31.0 Equipment......................... 71 71 77
33.0 Investments and loans............. 71,105 67,487 77,724
43.0 Interest and dividends............ 20,484 22,989 26,404
--------- --------- ----------
99.9 Total obligations............... 93,884 92,469 106,179
---------------------------------------------------------------------------
mortgage-backed securities
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
00.01 Capital investment: Commitments to
issue MBS....................... 200,735 128,618 141,293
--------- --------- ----------
10.00 Total obligations (object class
33.0)......................... 200,735 128,618 141,293
----------------------------------------------------------------------------
Budgetary resources available for obligation:
22.00 New budget authority (gross)...... 200,735 128,618 141,293
23.95 New obligations................... -200,735 -128,618 -141,293
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Corporate borrowing authority..... 117,682 59,205 66,453
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 83,053 69,413 74,840
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 200,735 128,618 141,293
----------------------------------------------------------------------------
[[Page 1160]]
Change in unpaid obligations:
72.47 Unpaid obligations, start of year:
Obligated balance: Corporate
borrowing authority............. 114,618 155,523 155,523
73.10 New obligations................... 200,735 128,618 141,293
73.20 Total outlays (gross)............. -159,830 -128,618 -141,293
74.47 Unpaid obligations, end of year:
Obligated balance: Corporate
borrowing authority............. 155,523 155,523 155,523
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 83,053 69,413 74,840
86.98 Outlays from permanent balances... 76,777 59,205 66,453
--------- --------- ----------
87.00 Total outlays (gross)........... 159,830 128,618 141,293
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -83,053 -69,413 -74,840
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 117,682 59,205 66,453
90.00 Outlays........................... 76,777 59,205 66,453
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 200,735 128,618 141,293
--------- --------- ----------
1150 Total direct loan obligations... 200,735 128,618 141,293
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 559,585 636,362 695,567
1231 Disbursements: Direct loan
disbursements................... 159,830 128,618 141,293
1251 Repayments: Repayments and
prepayments..................... -83,053 -69,413 -74,840
--------- --------- ----------
1290 Outstanding, end of year........ 636,362 695,567 762,020
---------------------------------------------------------------------------
According to accounting practices for private corporations, the
mortgages in the pools of loans supporting the mortgage-backed
securities are considered to be owned by the holders of these
securities. Consequently, on the books of the Federal National Mortgage
Association (Fannie Mae), these mortgages are not considered assets and
the securities outstanding are not considered liabilities. However, the
concepts of the budget of the U.S. Government consider these mortgages
and mortgage-backed securities to be assets and liabilities,
respectively, of Fannie Mae. For the purposes of this document,
therefore, they are presented as assets and liabilities in the
accompanying schedules. On the schedule of Status of direct loans for
mortgage-backed securities, the items labeled ``New loans'' and
``Recoveries: Repayments and prepayments'' are budgetary terms. However,
from the Corporation's perspective, these items are ``Amounts issued''
and ``Amounts passed through to the holders of securities'',
respectively.
The forecast data contained in this material has been developed
based on certain general economic assumptions prevalent in the third
quarter of 1996 and should not be construed as an official forecast of
the Corporation's position.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-2501-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 560,107 636,883 696,097 762,582
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -522 -521 -541 -563
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 559,585 636,362 695,556 762,019
------------ -------------- ------------ -------------
1999 Total assets.................... 559,585 636,362 695,556 762,019
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 559,585 636,362 695,557 762,019
------------ -------------- ------------ -------------
2999 Total liabilities............... 559,585 636,362 695,557 762,019
-----------------------------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation
portfolio programs
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Interest expense and provision
for loan loss................. 8,960 11,979 16,015
00.02 Administration.................. 425 463 504
--------- --------- ----------
00.91 Total operating expenses...... 9,385 12,442 16,519
01.01 Capital investment: Mortgage
purchases for portfolio......... 46,267 57,253 70,848
--------- --------- ----------
10.00 Total obligations............... 55,652 69,695 87,367
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 21,989 23,815 25,793
22.00 New budget authority (gross)...... 66,427 91,234 132,266
22.60 Redemption of debt................ -8,949 -19,561 -42,757
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 79,467 95,488 115,302
23.95 New obligations................... -55,652 -69,695 -87,367
24.47 Unobligated balance available, end
of year: Authority to borrow.... 23,815 25,793 27,935
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Net change in borrowing
authorities..................... 43,200 61,039 93,013
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 23,227 30,195 39,253
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 66,427 91,234 132,266
----------------------------------------------------------------------------
Change in unpaid obligations:
72.47 Unpaid obligations, start of year:
Obligated balance: Authority to
borrow.......................... 7,993 548 1,140
73.10 New obligations................... 55,652 69,695 87,367
73.20 Total outlays (gross)............. -63,097 -69,103 -87,415
74.47 Unpaid obligations, end of year:
Obligated balance: Authority to
borrow.......................... 548 1,140 1,092
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 33,115 44,740 79,123
86.98 Outlays from permanent balances... 29,982 24,363 8,292
--------- --------- ----------
87.00 Total outlays (gross)........... 63,097 69,103 87,415
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -23,227 -30,195 -39,253
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 43,200 61,039 93,013
90.00 Outlays........................... 39,870 38,908 48,162
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 46,267 57,253 70,848
--------- --------- ----------
1150 Total direct loan obligations... 46,267 57,253 70,848
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 94,989 129,427 176,350
[[Page 1161]]
1231 Disbursements: Direct loan
disbursements................... 46,267 57,253 70,848
1251 Repayments: Repayments and
prepayments..................... -11,829 -10,330 -6,913
--------- --------- ----------
1290 Outstanding, end of year........ 129,427 176,350 240,285
---------------------------------------------------------------------------
Federal Home Loan Mortgage Corporation (Freddie Mac), is a
federally-charted, private shareholder-owned company with a public
mission to provide stability and increase the liquidity of the
residential mortgage market, and to help increase the availability of
mortgage credit to low- and moderate-income families and in underserved
areas. In carrying out its mission, Freddie Mac engages primarily in two
forms of business: investing in portfolios of residential mortgages and
guaranteeing residential mortgage securities. At the end of 1995,
Freddie Mac held a net mortgage portfolio totaling over $107 billion and
had outstanding guaranteed mortgage-backed securities of just under $460
billion.
Through a federal charter, Congress has equipped Freddie Mac with
certain advantages over wholly private firms in carrying out these
activities. These advantages include an exemption from state and local
taxes (except real property taxes), an exemption for their debt and
mortgage securities from SEC filing registration requirements, and a
potential access to U.S. Treasury funds. Freddie Mac does pay federal
income tax, however, and securities guaranteed by Freddie Mac and debt
issued by the company are not explicitly backed by the full faith and
credit of the U.S. Government. The common stock of the corporation is
owned by the public, is fully transferable, and trades on the New York
and Pacific stock exchanges.
Freddie Mac was established in 1970 under the Emergency Home Finance
Act. Congress chartered Freddie Mac to provide mortgage lenders with an
organized national secondary market enabling them to manage their
conventional mortgage portfolio more effectively and gain indirect
access to a ready source of additional funds to meet new demands for
mortgages. Freddie Mac served as a conduit facilitating the flow of
investment dollars from the capital markets to mortgage lenders, and
ultimately, to homebuyers, increasing the amount of mortgage credit
available and making it more affordable.
The Financial Institutions Reform, Recovery, and Enforcement Act of
1989 (FIRREA) significantly changed the corporate governance of Freddie
Mac. The company's three member Board of Directors, which had
corresponded with the Federal Home Loan Bank Board, was replaced with an
eighteen member Board of Directors. Thirteen board members are elected
annually by shareholders and five are annually appointed by the
President of the United States. In addition, FIRREA converted Freddie
Mac's 60 million shares of non-voting, senior participating preferred
stock into voting common stock. As a result, the corporation was taken
off the federal budget.
FIRREA also clarified Freddie Mac's role in the housing finance
delivery system through amendments to its charter act. Specifically,
FIRREA established Freddie Mac's public mission: ``to provide stability
in the secondary market for residential mortgages; respond appropriately
to the private capital market; provide ongoing assistance to the
secondary market for residential mortgages (including activities
relating to mortgages on housing for low- and moderate-income families
involving a reasonable economic return that may be less than the return
earned on other activities); and promote access to mortgage credit
throughout the Nation (including central cities, rural areas, and
underserved areas) by increasing the liquidity of mortgage investments
and improving the distribution of investment capital for residential
mortgage financing.''
The Federal Housing Enterprises Financial Safety and Soundness Act
of 1992 (``The Act'') added to Freddie Mac's public mission by
introducing new affordable housing goals that are designed to improve
the flow of mortgage funds to low- and moderate-income families in
central cities, rural areas, and other underserved areas. On December 1,
1995, the U.S. Department of Housing and Urban Development (HUD) issued
a final rule that sets the levels of the goals for 1996-1999 and
establishes the requirements for counting mortgage purchases for meeting
these goals. During the transition period prior to the issuance of the
final regulation, Freddie Mac was subject to interim affordable housing
goals. These interim goals required Freddie Mac to have 30 percent of
the units it finances serve low- and moderate-income families and 30
percent of the units it finances in central cities. In 1995, Freddie Mac
purchased about 39 percent of its financings from low- and moderate-
income families and 23 percent of its business was located in central
cities. Under the interim goals, Freddie Mae also was required to
dedicate $3.357 billion in financings for households with very low
incomes or with low incomes living in low-income areas. Freddie Mac
achieved this goal with $5.426 billion of such loans in 1995.
The Act also enhanced the regulatory oversight of Freddie Mac by
establishing the Office of Federal Housing Enterprise Oversight (OFHEO),
an independent office within HUD, headed by a Director who reports
directly to the Congress. OFHEO is responsible for ensuring that Freddie
Mac is adequately capitalized and operating in a safe and sound manner.
Included among the express statutory authorities of the Director is the
authority to conduct examinations of the financial health of the company
and to issue minimum and risk-based capital standards. The minimum
capital requirements are computed from statutorily established ratios
that are applied to the assets and off-balance sheet risks of Freddie
Mac. The risk-based capital standard determines the amount of capital
that Freddie Mac must hold to withstand the impact of simultaneous
adverse credit and interest rate stresses over a 10-year period, plus an
additional amount to cover management and operations risk.
Meanwhile, Freddie Mac has remained profitable. Freddie Mac recorded
net income of $1.09 billion in 1995, an 11 percent increase over 1994
earnings of $983 million. Most of Freddie's increased earnings in 1995
came from a $284 million increase in net interest income as Freddie's
retained portfolio surged by almost 50 percent during the year to pass
the $100 billion mark in the fourth quarter. While accepting and
managing higher interest rate risk, Freddie Mac has expanded its
investments in retained mortgages from only $34 billion in 1992 to $107
billion at the end of 1995 in an effort to generate higher overall
returns.
The financial data contained in this material relating to future
periods represent estimates that have been prepared specifically for
inclusion in the President's budget. These data should not be viewed as
an official forecast of the corporation's future position, nor should
they be used as a basis for making financial or investment decisions
relating to the corporation. The data have been developed on the basis
of certain economic assumptions that are subject to periodic review and
revision. Consequently, the estimates are subject to forecast error and
actual results from future business operations are likely to differ from
these data.
According to generally accepted accounting principles utilized by
private corporations, the mortgages in the pools of loans supporting PCs
are considered to be owned by the holder of these securities. Therefore,
Freddie Mac does not show these mortgages as assets. However, the budget
philosophy of the United States Government includes these mortgages and
mortgages pass-through securities as assets and liabilities,
respectively, of Freddie Mac. For the purpose of this document,
therefore, they are presented as assets and liabilities in the
accompanying schedules. On the Status of Direct Loans schedule for
mortgage pass-through securities, the
[[Page 1162]]
items labeled ``Disbursements'' and ``Repayments'' are budgetary terms.
However, from Freddie Mac's perspective, these amounts represent ``Sales
of PCs'' and ``Amounts passed through to PC holders,'' respectively.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 8,623 11,139
0102 Expense........................... -7,571 -9,926
------------ -------------- ------------ -------------
0109 Net income........................ 1,052 1,213
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1101 Federal assets: Fund balances with
Treasury........................ 2,820 2,689 2,564 2,445
Non-Federal assets:
1201 Investments in non-Federal
securities, net............... 2,150 3,158 4,639 6,815
1206 Receivables, net................ 3,680 8,801 12,193 12,497
1207 Advances and prepayments........ 583 528 478
Other Federal assets:
1801 Cash and other monetary assets.. 23,916 17,420 12,688 9,241
1802 Inventories and related
properties.................... 94,989 129,427 176,350 240,285
1803 Property, plant and equipment,
net........................... 1,098 906 725 539
------------ -------------- ------------ -------------
1999 Total assets.................... 128,653 162,984 209,687 272,300
LIABILITIES:
2101 Federal liabilities: Accounts
payable......................... 73 1
Non-Federal liabilities:
2201 Accounts payable................ 452 764 1,291 2,182
2202 Interest payable................ 1,090 1,492 2,042 2,795
2203 Debt............................ 111,610 146,954 193,491 254,765
2206 Pension and other actuarial
liabilities................... 7,233 5,395 4,024
Other:
2207 Accrued payroll and benefits.. 9,725 38 58 89
2207 Accrued annual leave (funded
or unfunded)................ 2 2 2
------------ -------------- ------------ -------------
2999 Total liabilities............... 122,950 156,484 202,279 263,857
NET POSITION:
3200 Invested capital.................. 5,703 6,500 7,408 8,443
------------ -------------- ------------ -------------
3999 Total net position.............. 5,703 6,500 7,408 8,443
------------ -------------- ------------ -------------
4999 Total liabilities and net position 128,653 162,984 209,687 272,300
-----------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
21.0 Travel and transportation of
persons......................... 9 9 9
23.3 Communications, utilities, and
other rent...................... 32 32 32
24.0 Printing and reproduction......... 3 3 3
Other services:
25.2 Other services--Non-Federal
employment compensation....... 257 270 281
25.2 Other services.................. 112 137 167
26.0 Supplies and materials............ 12 12 12
33.0 Mortgage purchases for portfolio.. 46,267 57,253 70,848
43.0 Interest and provision for loan
losses.......................... 8,960 11,979 16,015
--------- --------- ----------
99.9 Total obligations............... 55,652 69,695 87,367
---------------------------------------------------------------------------
mortgage-backed securities
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
00.01 Capital investment: Issue (sales)
of participation certification.. 123,808 127,522 131,348
--------- --------- ----------
10.00 Total obligations (object class
33.0)......................... 123,808 127,522 131,348
----------------------------------------------------------------------------
Budgetary resources available for obligation:
22.00 New budget authority (gross)...... 123,808 127,522 131,348
23.95 New obligations................... -123,808 -127,522 -131,348
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Corporate borrowing authority (net
PC pool change)................. 14,264 14,709 15,168
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 109,544 112,813 116,180
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 123,808 127,522 131,348
----------------------------------------------------------------------------
Change in unpaid obligations:
73.10 New obligations................... 123,808 127,522 131,348
73.20 Total outlays (gross)............. -123,808 -127,522 -131,348
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 123,808 127,522 131,348
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -109,544 -112,813 -116,180
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 14,264 14,709 15,168
90.00 Outlays........................... 14,264 14,709 15,168
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 123,808 127,522 131,348
--------- --------- ----------
1150 Total direct loan obligations... 123,808 127,522 131,348
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 457,046 471,310 486,019
1231 Disbursements: Direct loan
disbursements................... 123,808 127,522 131,348
1251 Repayments: Repayments and
prepayments..................... -109,544 -112,813 -116,180
--------- --------- ----------
1290 Outstanding, end of year........ 471,310 486,019 501,187
---------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1901 Other Federal assets: Underlying
Mortgages....................... 457,046 471,310 486,019 501,187
------------ -------------- ------------ -------------
1999 Total assets.................... 457,046 471,310 486,019 501,187
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 457,046 471,310 486,019 501,187
------------ -------------- ------------ -------------
2999 Total liabilities............... 457,046 471,310 486,019 501,187
-----------------------------------------------------------------------------------------------
FARM CREDIT SYSTEM
The Farm Credit System is a government sponsored enterprise that
provides privately financed credit to agricultural and rural
communities. The major functional entities of the system are: (1) Banks
for Cooperatives (BC), (2) Agricultural Credit Bank (ACB), (3) Farm
Credit Banks (FCB), and (4) direct lender associations. The history and
specific functions of the bank entities are discussed after the
presentation of financial schedules for each bank entity. As part of the
Farm Credit System (FCS), these entities are regulated and examined by
the Farm Credit Administration (FCA), an independent Federal agency. The
administrative costs of FCA are currently financed by assessments of
system institutions. System banks finance loans primarily from sales of
bonds to the public and their own capital funds. The system bonds issued
by the banks are not guaranteed by the U.S. Government either as to
principal or interest. The bonds are backed by an insurance fund,
administered by the Farm Credit System
[[Page 1163]]
Insurance Corporation (FCSIC), an independent Federal agency that
collects insurance premiums from member banks to pay its administrative
expenses and fund insurance reserves. All of the banks' current
operating expenses are paid from their own income and do not require
budgetary resources from the Federal Government. Limited Federal
assistance is provided to support interest payments on special FCS
Financial Assistance Corporation (FAC) debt obligations (see discussion
of FAC elsewhere in this document).
Banks for Cooperatives
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Administrative expenses......... 6 6 7
00.02 Interest on borrowings.......... 137 137 141
00.03 Insurance premiums.............. 3 3 3
00.04 Provision for loan losses....... 9 7 5
00.06 Income tax expense.............. 5 5 7
00.07 Other expenses.................. 9 10 9
--------- --------- ----------
00.91 Total operating expenses...... 169 168 172
01.01 Capital investment: Direct loans.. 12,992 11,838 11,683
--------- --------- ----------
10.00 Total obligations............... 13,161 12,006 11,855
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 2,309 2,281 2,278
22.00 New budget authority (gross)...... 13,257 12,303 11,874
22.60 Redemption of debt................ -124 -300
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 15,442 14,284 14,152
23.95 New obligations................... -13,161 -12,006 -11,855
24.47 Unobligated balance available, end
of year: Authority to borrow.... 2,281 2,278 2,297
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Net borrowing..................... 58
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 13,257 12,303 11,816
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 13,257 12,303 11,874
----------------------------------------------------------------------------
Change in unpaid obligations:
73.10 New obligations................... 13,161 12,006 11,855
73.20 Total outlays (gross)............. -13,161 -12,006 -11,855
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 13,161 12,006 11,816
86.98 Outlays from permanent balances... 39
--------- --------- ----------
87.00 Total outlays (gross)........... 13,161 12,006 11,855
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -13,257 -12,303 -11,816
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 58
90.00 Outlays........................... -96 -297 39
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 12,993 11,837 11,682
--------- --------- ----------
1150 Total direct loan obligations... 12,993 11,837 11,682
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 2,273 2,222 1,964
1231 Disbursements: Direct loan
disbursements................... 12,992 11,837 11,683
1251 Repayments: Repayments and
prepayments..................... -13,043 -12,091 -11,598
1263 Write-offs for default: Direct
loans........................... -4 -1
--------- --------- ----------
1290 Outstanding, end of year........ 2,222 1,964 2,048
---------------------------------------------------------------------------
Note.--Direct loan balances exclude nonaccrual loans and sales
contracts.
Pursuant to the Agricultural Credit Act of 1987, stockholders in 11
of 13 Banks for Cooperatives voted in 1988 to merge into a single
National Bank for Cooperatives. On January 1, 1995, the Springfield Bank
for Cooperatives also merged with other entities, as discussed below, to
form the first Agricultural Credit Bank. The remaining Cooperative
entity, the St. Paul Bank for Cooperatives, is independently chartered
to provide credit and related services, nationwide, to eligible
cooperatives primarily engaged in farm supply, grain, marketing and
processing (including sugar and dairy.) Loans are also made to rural
utilities, including telecommunications companies. The financial
schedules below reflect the operations of the St. Paul Bank for
Cooperatives. Loans are made for both seasonal and long-term needs.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 177 200 198 205
0102 Total interest expense............ -127 -137 -137 -141
------------ -------------- ------------ -------------
0109 Net interest income............... 50 63 61 64
0111 Other income...................... 10 13 13 13
0112 Other expenses.................... -21 -32 -32 -31
------------ -------------- ------------ -------------
0119 Net income........................ -11 -19 -19 -18
------------ -------------- ------------ -------------
0191 Total revenues.................... 187 213 211 218
------------ -------------- ------------ -------------
0192 Total expenses.................... -148 -169 -169 -172
------------ -------------- ------------ -------------
0199 Net income or loss................ 39 44 42 46
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:
1201 Cash and investment securities.. 394 356 357 368
1206 Accrued interest receivable on
loans......................... 40 41 41 41
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 2,273 2,222 1,964 2,048
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -24 -34 -37 -41
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 2,249 2,188 1,927 2,007
1803 Other Federal assets: Property,
plant and equipment, net........ 104 119 114 117
------------ -------------- ------------ -------------
1999 Total assets.................... 2,787 2,704 2,439 2,533
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 29 34 34 34
Non-Federal liabilities:
Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 1,329 1,534 1,346 1,384
2201 Consolidated systemwide notes. 1,166 837 725 745
2201 Notes payable and other
interest-bearing liabilities
2202 Accrued interest payable........ 17 20 27 30
------------ -------------- ------------ -------------
2999 Total liabilities............... 2,541 2,425 2,132 2,193
NET POSITION:
3300 Cumulative results of operations.. 246 279 307 340
------------ -------------- ------------ -------------
3999 Total net position.............. 246 279 307 340
------------ -------------- ------------ -------------
4999 Total liabilities and net position 2,787 2,704 2,439 2,533
-----------------------------------------------------------------------------------------------
Note.--Loans to cooperatives include nonaccrual loans and sales
contracts.
[[Page 1164]]
Statement of Changes in Net Worth (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 224 246 279 307
============ ============== ============ =============
Capital stock and participations
issued.............................. 4 11 3 5
Capital stock and participations
retired............................. -11 -8 -7 -6
Surplus retired.......................
Net income............................ 39 44 43 46
Cash/Dividends/Patronage Distributions -10 -14 -11 -12
Other, net............................
------------ -------------- ------------ -------------
Ending balance of net worth............. 246 279 307 340
-----------------------------------------------------------------------------------------------
Financing Activities (in millions of dollars)
--------------------------------------------------------------------
Identification code 99-4120-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligation............................ 1,699 2,459 2,339 2,031
============== ============== ============= ==============
Consolidated systemwide and other bank
bonds issued........................ 1,524 2,331 2,025 2,125
Consolidated systemwide and other bank
bonds retired....................... -1,287 -2,788 -2,475 -2,350
Consolidated systemwide notes, net.... 523 337 142 283
-------------- -------------- ------------- --------------
Ending balance of outstanding system
obligations........................... 2,459 2,339 2,031 2,089
-------------------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
11.1 Personnel compensation: Personnel
compensation and benefits....... 5 6 6
23.2 Cost of space occupied and
equipment....................... 1 1 1
25.2 Other services.................... 3 3 3
33.0 Investments and loans............. 12,992 11,837 11,682
43.0 Interest and dividends............ 137 137 141
92.0 Undistributed expenses............ 23 22 22
--------- --------- ----------
99.9 Total obligations............... 13,161 12,006 11,855
---------------------------------------------------------------------------
Agricultural Credit Banks
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Administrative expenses......... 41 37 39
00.02 Interest on borrowings.......... 1,007 1,109 1,198
00.03 Insurance premiums.............. 18 16 17
00.04 Provision for loan losses....... 48 20 15
00.06 Income tax expense.............. 29 30 38
00.07 Other expenses.................. 62 69 69
--------- --------- ----------
00.91 Total operating expenses...... 1,205 1,281 1,376
01.01 Capital investment: direct loans.. 48,117 46,000 47,000
--------- --------- ----------
10.00 Total obligations............... 49,322 47,281 48,376
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 2,548 2,796 2,416
22.00 New budget authority (gross)...... 49,570 46,901 48,460
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 52,118 49,697 50,876
23.95 New obligations................... -49,322 -47,281 -48,376
24.47 Unobligated balance available, end
of year: Authority to borrow.... 2,796 2,416 2,500
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Authority to borrow (indefinite).. 806 152 572
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 48,764 46,749 47,888
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 49,570 46,901 48,460
----------------------------------------------------------------------------
Change in unpaid obligations:
72.90 Unpaid obligations, start of year:
Obligated balance: Fund balance. 712 712 712
73.10 New obligations................... 49,322 47,281 48,376
73.20 Total outlays (gross)............. -49,322 -47,281 -48,376
74.90 Unpaid obligations, end of year:
Obligated balance: Fund balance. 712 712 712
----------------------------------------------------------------------------
Outlays (gross), detail:
86.93 Outlays from current balances..... 380
86.97 Outlays from new permanent
authority....................... 49,322 46,901 48,376
--------- --------- ----------
87.00 Total outlays (gross)........... 49,322 47,281 48,376
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -48,764 -46,749 -47,888
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 806 152 572
90.00 Outlays........................... 558 532 488
---------------------------------------------------------------------------
On January 1, 1995, the National Bank for Cooperatives, the
Springfield Bank for Cooperatives, and the Farm Credit Bank of
Springfield consolidated to form an Agricultural Credit Bank (ACB),
known as CoBank ACB. This bank is headquartered in Denver, Colorado and
serves eligible cooperatives nationwide, and provides funding to
Agricultural Credit Associations (ACAs) in one of its regions. An ACB
operates under statutory authority that combines the authorities of a
FCB and a BC. In exercising its FCB authority, CoBank ACB's charter
limits its lending to ACAs located in the region previously served by
the Farm Credit Bank of Springfield. As an entity lending to
Cooperatives, CoBank engages in the same business activities as the St.
Paul Bank for Cooperatives and it provides international loans for the
financing of agricultural exports.
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 48,117 46,000 47,000
--------- --------- ----------
1150 Total direct loan obligations... 48,117 46,000 47,000
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 14,231 14,914 15,583
1231 Disbursements: Direct loan
disbursements................... 48,117 46,000 47,000
1251 Repayments: Repayments and
prepayments..................... -47,422 -45,328 -46,361
1263 Write-offs for default: Direct
loans........................... -12 -3 -5
--------- --------- ----------
1290 Outstanding, end of year........ 14,914 15,583 16,217
---------------------------------------------------------------------------
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 1,171 1,317 1,406 1,511
0102 Total interest expense............ -902 -1,008 -1,109 -1,198
------------ -------------- ------------ -------------
0109 Net interest income............... 269 309 297 313
0111 Other income...................... 23 26 15 16
0112 Other expense..................... -175 -198 -172 -178
------------ -------------- ------------ -------------
0119 Net income........................ -152 -172 -157 -162
------------ -------------- ------------ -------------
0191 Total revenues.................... 1,194 1,343 1,421 1,527
------------ -------------- ------------ -------------
0192 Total expenses.................... -1,077 -1,206 -1,281 -1,376
------------ -------------- ------------ -------------
0199 Net income or loss................ 117 137 140 151
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:
1201 Cash and investment securities.. 2,652 2,915 2,488 2,504
[[Page 1165]]
1206 Accrued interest receivable on
loans......................... 165 167 157 172
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 14,237 14,914 15,583 16,217
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -170 -208 -225 -235
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 14,067 14,706 15,358 15,982
1803 Other Federal assets: Property,
plant and equipment, net........ 131 138 153 153
------------ -------------- ------------ -------------
1999 Total assets.................... 17,015 17,926 18,156 18,811
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 142 129 140 145
Non-Federal liabilities:
Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 10,805 14,510 14,580 15,052
2201 Consolidated systemwide notes. 4,717 1,818 1,900 2,000
2201 Notes payable and other
interest-bearing liabilities 12 9 10 10
2202 Accrued interest payable........ 126 180 181 188
------------ -------------- ------------ -------------
2999 Total liabilities............... 15,802 16,646 16,811 17,395
NET POSITION:
3200 Invested capital.................. 1,213 1,280 1,345 1,416
------------ -------------- ------------ -------------
3999 Total net position.............. 1,213 1,280 1,345 1,416
------------ -------------- ------------ -------------
4999 Total liabilities and net position 17,015 17,926 18,156 18,811
-----------------------------------------------------------------------------------------------
Statement of Changes in Net Worth (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 1,210 1,213 1,281 1,345
============ ============== ============ =============
Capital stock and participations
issued.............................. 6 4 4
Capital stock and participations
retired............................. -52 -38 -46 -46
Net income............................ 117 138 140 151
Cash/Dividends/Patronage Distributions -32 -32 -34 -38
Other, net............................ -36
------------ -------------- ------------ -------------
Ending balance of net worth............. 1,213 1,281 1,345 1,416
-----------------------------------------------------------------------------------------------
Financing Activities (in millions of dollars)
--------------------------------------------------------------------
Identification code 99-4130-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 13,736 15,320
15,964 16,116
============== ============== ============= ==============
Consolidated systemwide and other bank
bonds issued........................ 7,768 10,663 7,200 7,500
Consolidated systemwide and other bank
bonds retired....................... -5,505 -7,079 -7,130 -7,030
Consolidated systemwide notes, net.... -679 -2,940 82 100
-------------- -------------- ------------- --------------
Ending balance of outstanding system
obligations........................... 15,320 15,964
16,116 16,686
-------------------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
12.1 Personnel compensation and
benefits........................ 35 32 34
23.2 Cost of space occupied and
equipment....................... 6 5 5
25.2 Other services.................... 19 16 17
33.0 Investments and loans............. 48,117 46,000 47,000
43.0 Interest and dividends............ 1,007 1,109 1,198
92.0 Undistributed expenses............ 138 119 122
--------- --------- ----------
99.9 Total obligations............... 49,322 47,281 48,376
---------------------------------------------------------------------------
Farm Credit Banks
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Administrative expenses......... 100 103 104
00.02 Interest on borrowings.......... 2,356 2,586 2,774
00.03 Insurance premiums.............. 13 13 12
00.04 Provision for loan losses....... 9 6 3
00.05 Losses/gains on property........ -4 -2
00.06 Other expenses.................. 252 169 149
--------- --------- ----------
00.91 Total operating expenses...... 2,726 2,875 3,042
01.01 Capital investment: Direct loans.. 29,160 28,789 30,083
--------- --------- ----------
10.00 Total obligations............... 31,886 31,664 33,125
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 6,083 7,125 7,333
22.00 New budget authority (gross)...... 32,928 31,872 33,176
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 39,011 38,997 40,509
23.95 New obligations................... -31,886 -31,664 -33,125
24.47 Unobligated balance available, end
of year: Authority to borrow.... 7,125 7,333 7,384
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Authority to borrow (indefinite).. 3,354 1,598 1,040
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 29,574 30,274 32,136
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 32,928 31,872 33,176
----------------------------------------------------------------------------
Change in unpaid obligations:
72.90 Unpaid obligations, start of year:
Obligated balance: Fund balance. 771 854 676
73.10 New obligations................... 31,886 31,664 33,125
73.20 Total outlays (gross)............. -31,803 -31,842 -33,243
74.90 Unpaid obligations, end of year:
Obligated balance: Fund balance. 854 676 558
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 31,803 31,842 33,176
86.98 Outlays from permanent balances... 67
--------- --------- ----------
87.00 Total outlays (gross)........... 31,803 31,842 33,243
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -29,574 -30,274 -32,136
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 3,354 1,598 1,040
90.00 Outlays........................... 2,229 1,568 1,107
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 29,160 28,789 30,083
--------- --------- ----------
1150 Total direct loan obligations... 29,160 28,789 30,083
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 36,536 39,197 41,156
1231 Disbursements: Direct loan
disbursements................... 29,077 28,967 30,201
1251 Repayments: Repayments and
prepayments..................... -26,417 -27,005 -28,684
1263 Write-offs for default: Direct
loans........................... 1 -3 -2
--------- --------- ----------
1290 Outstanding, end of year........ 39,197 41,156 42,671
---------------------------------------------------------------------------
Note.--Loans outstanding at end of year do not include nonaccrual
loans and sales contracts.
The Agricultural Credit Act of 1987 (1987 Act) required the Federal
Land Banks (FLBs) and Federal Intermediate Credit Banks (FICBs) to merge
into a Farm Credit Bank (FCB) in each of the 12 Farm Credit districts.
The FCBs
[[Page 1166]]
operate under statutory authority that combines the prior authorities of
the FLB and the FICB. No merger occurred in the Jackson district in 1988
because the FLB was in receivership. Pursuant to section 410(e) of the
1987 Act, as amended by the Farm Credit Banks Safety and Soundness Act
of 1992, the FICB of Jackson merged with the FCB of Columbia on October
1, 1993. Mergers and consolidations of FCBs across district lines, that
began in 1992 continued through mid-1995. As a result of this
restructuring activity, 6 FCBs headquartered in the following cities,
remain: AgFirst FCB, Columbia, South Carolina; AgAmerica FCB, Spokane,
Washington; AgriBank FCB, St. Paul, Minnesota; FCB of Wichita, Wichita,
Kansas; FCB of Texas, Austin, Texas; and Western FCB, Sacramento,
California.
The FCBs serve as discount banks and as of October 1, 1996 provided
funds to 32 Federal Land Credit Associations (FLCA), 66 Production
Credit Associations (PCAs), and 60 Agricultural Credit Associations
(ACAs). These direct lender associations, in turn, make short-term
production loans (PCAs and ACAs) and long-term real estate loans (FLCAs
and ACAs) to eligible farmers and ranchers. Also, as of January 1, 1996,
69 Federal Land Bank Associations originated and serviced long-term real
estate loans for 2 of the 6 FCBs that have no affiliated FLCAs. FCBs can
also lend to local financing institutions, including commercial banks,
as authorized by the Farm Credit Act of 1971, as amended.
All the capital stock of the FICB's, from organization in 1923 to
December 31, 1956, was held by the U.S. Government. The 1956 Act
provided a long-range plan for the eventual ownership of the credit
banks by the production credit associations and the gradual retirement
of the Government's investment in the banks. This retirement was
accomplished in full on December 31, 1968. The last of the Government
capital that had been invested in the FLB's was repaid in 1947.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 3,011 3,111 3,253 3,436
0102 Total interest expense............ -2,302 -2,356 -2,586 -2,774
------------ -------------- ------------ -------------
0109 Net interest income............... 709 755 667 662
0111 Other income...................... 44 47 17 16
0112 Other expenses.................... -361 -370 -289 -268
------------ -------------- ------------ -------------
0119 Net income........................ -317 -323 -272 -252
------------ -------------- ------------ -------------
0191 Total revenues.................... 3,055 3,158 3,270 3,452
------------ -------------- ------------ -------------
0192 Total expenses.................... -2,663 -2,726 -2,875 -3,042
------------ -------------- ------------ -------------
0199 Net income or loss................ 392 432 395 410
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Non-Federal assets:
1201 Cash and investment securities.. 6,708 7,487 7,544 7,618
1206 Accrued Interest Receivable..... 810 781 806 819
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 36,536 39,198 40,848 41,967
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -548 -494 -444 -435
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 35,988 38,704 40,404 41,532
1803 Other Federal assets: Property,
plant and equipment, net........ 525 653 545 545
------------ -------------- ------------ -------------
1999 Total assets.................... 44,031 47,625 49,299 50,514
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 276 272 225 224
Non-Federal liabilities:
Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 28,532 31,860 31,496 33,206
2201 Consolidated systemwide notes. 10,060 10,086 12,048 11,378
2201 Notes payable and other
interest-bearing liabilities 597 662 719 829
2202 Accrued interest payable........ 437 455 479 457
------------ -------------- ------------ -------------
2999 Total liabilities............... 39,902 43,335 44,967 46,094
NET POSITION:
3200 Invested capital.................. 4,129 4,290 4,332 4,420
------------ -------------- ------------ -------------
3999 Total net position.............. 4,129 4,290 4,332 4,420
------------ -------------- ------------ -------------
4999 Total liabilities and net position 44,031 47,625 49,299 50,514
-----------------------------------------------------------------------------------------------
Statement of Changes in Net Worth (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 3,964 4,129 4,290 4,332
============ ============== ============ =============
Capital stock and participations
issued.............................. 37 77 39 37
Capital stock and participations
retired............................. -121 -99 -69 -55
Net income............................ 392 432 394 410
Cash/Dividends/Patronage Distributions -146 -251 -323 -304
Other, net............................ 3 2 1
------------ -------------- ------------ -------------
Ending balance of net worth............. 4,129 4,290 4,332 4,420
-----------------------------------------------------------------------------------------------
Financing Activities (in millions of dollars)
--------------------------------------------------------------------
Identification code 99-4160-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 38,119 38,651
41,994 43,956
============== ============== ============= ==============
Consolidated systemwide and other bank
bonds issued........................ 30,137 40,404 41,803 42,594
Consolidated systemwide and other bank
bonds retired....................... -29,891 -38,432 -41,069 -40,471
Consolidated systemwide notes, net.... 286 1,371 1,228 -682
-------------- -------------- ------------- --------------
Ending balance of outstanding system
obligations........................... 38,651 41,994
43,956 45,397
-------------------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
11.1 Personnel compensation: Full-time
permanent....................... 80 82 83
23.2 Cost of space occupied and
equipment....................... 19 20 21
25.2 Other services.................... 13 13 12
33.0 Investments and loans............. 29,160 28,789 30,083
43.0 Interest and dividends............ 2,356 2,585 2,774
92.0 Undistributed expenses............ 257 174 152
99.5 Below reporting threshold......... 1 1
--------- --------- ----------
99.9 Total obligations............... 31,886 31,664 33,125
---------------------------------------------------------------------------
Federal Agricultural Mortgage Corporation
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
00.01 Administrative expenses and taxes. 5 6 8
--------- --------- ----------
10.00 Total obligations............... 5 6 8
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 11 12 15
22.00 New budget authority (gross)...... 6 9 13
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 17 21 28
23.95 New obligations................... -5 -6 -8
24.47 Unobligated balance available, end
of year: Authority to borrow.... 12 15 20
----------------------------------------------------------------------------
[[Page 1167]]
New budget authority (gross), detail:
68.00 Spending authority from offsetting
collections (gross): Offsetting
collections (cash).............. 6 9 13
----------------------------------------------------------------------------
Change in unpaid obligations:
73.10 New obligations................... 5 6 8
73.20 Total outlays (gross)............. -5 -6 -8
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 5 6 8
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -6 -9 -13
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays........................... -1 -3 -5
---------------------------------------------------------------------------
Farmer Mac is authorized under the Farm Credit Act of 1971 (the
Act), as amended by the Agricultural Credit Act of 1987, to create a
secondary market for agricultural real estate and rural home mortgages
that meet minimum credit standards (qualified loans). The Farmer Mac
title of the Act was amended by the 1990 farm bill to authorize Farmer
Mac to purchase, pool, and securitize the guaranteed portions of farmer
program, rural business and community development loans guaranteed by
the USDA. The Farmer Mac title was further amended in 1991 to clarify
Farmer Mac's authority to issue debt obligations, provide for the
establishment of minimum capital standards, and establish the Office of
Secondary Market Oversight at the Farm Credit Administration (FCA) and
expand the agency's rulemaking authority. Most recently, the Farm Credit
System Reform Act of 1996 amended the Farmer Mac title to allow Farmer
Mac to purchase loans directly from lenders and to issue and guarantee
mortgage-backed securities without requiring that a minimum cash reserve
or subordinated (first loss) interest be maintained by the lenders,
poolers or investors as had been required under its original authority.
The 1996 Act also increased Farmer Mac's capital requirements over time
and expanded the regulatory authorities of the FCA.
Farmer Mac operates through two programs, ``Farmer Mac I,'' which
involves qualified loans, and ``Farmer Mac II,'' which involves
guaranteed portions of USDA guaranteed loans. Farmer Mac operates by:
(i) purchasing newly originated or existing qualified loans or
guaranteed portions from lenders; and (ii) exchanging qualified loans or
guaranteed portions for guaranteed securities. Loans purchased by Farmer
Mac are aggregated into pools that back Farmer Mac guaranteed securities
which are held by Farmer Mac or sold into the capital markets. Farmer
Mac is intended to attract new capital for financing qualified loans and
guaranteed portions, foster increased long-term, fixed-rate lending, and
provide greater liquidity to agricultural and rural lenders. Increased
competition among agricultural lenders, stimulated by access to the
secondary market, should result in more favorable rates and terms for
agricultural borrowers.
Farmer Mac is governed by a 15 member Board of Directors. Ten Board
members are elected by stockholders, including five by the Farm Credit
System and five by commercial lenders. Five are appointed by the
President, subject to Senate confirmation.
Financing
Financial support and funding for Farmer Mac's operations comes from
several sources: sale of common and preferred stock; issuance of debt
obligations; gain on sale of guaranteed loan-backed securities;
guarantee fees; and income from investments. Under procedures specified
in the Act, Farmer Mac may issue obligations to the U.S. Treasury in a
cumulative amount not to exceed $1.5 billion to fulfill its guarantee
obligations.
The Act provides for the actuarial soundness of the guarantee fee to
be reviewed annually by the Comptroller General in a report to Congress.
The soundness of the Farmer Mac I program is maintained through the
application of multiple procedures. First, all loans are screened
against Farmer Mac's credit underwriting and appraisal standards.
Second, Farmer Mac assesses annual guarantee fees set at levels
determined, with the assistance of computer modeling tools to evaluate
Farmer Mac's portfolio under conditions of economic stress, to be
adequate for potential risks undertaken. Third, Farmer Mac controls
interest rate risk through matched funding and requirement of yield
maintenance provisions for mortgages that prepay. Fourth, Farmer Mac's
portfolio of loans and guaranteed securities must conform to geographic
and commodity diversification standards set by the Board. Fifth, Farmer
Mac maintains an allowance for loan losses determined to be adequate to
cover anticipated losses. Lastly, Farmer Mac must maintain core and risk
based capital as provided in the Act and FCA regulations. In the Farmer
Mac II program, the risks are minimal because only the USDA guaranteed
portions of loans are purchased and funding is matched to effectively
eliminate interest rate risk.
Available funds of Farmer Mac are invested in U.S. agency securities
or other high-grade commercial investments. No stock dividends are
allowed under the Act until the Board determines that an adequate loss
reserve has been funded to back Farmer Mac guarantees.
Guarantees
Farmer Mac provides a guarantee of timely payment of principal and
interest on securities backed by qualified loans or pools of qualified
loans. These securities are not guaranteed by the United States, and are
not ``government securities''. The 1996 Act removed requirements that
loan originators or other third parties maintain cash reserves or
subordinated securities in connection with the issuance of Farmer Mac's
guaranteed securities.
Farmer Mac is subject to reporting requirements under securities
laws and its guaranteed mortgage-backed securities are subject to
registration with the Securities and Exchange Commission under the 1933
and 1934 Securities Acts.
Regulation
Farmer Mac is federally regulated by the FCA's Office of Secondary
Market Oversight (OSMO). OSMO is responsible for examination of and
rulemaking for Farmer Mac, including the determination of the stress
test to evaluate the adequacy of Farmer Mac's capital and the
establishment of risk-based capital requirements after February 1999.
The 1996 amendments to the Farmer Mac title expanded FCA's regulatory
authority to include provisions for establishing a conservatorship or
receivership, if necessary, and provided for increased levels or core
capital phased in over three years. Lastly, during the capital phase-in
period the U.S. Treasury and FCA jointly monitor Farmer Mac's financial
condition and report to Congress biannually, as requested by Congress in
connection with the enactment of the 1996 Act.
Status of Guaranteed Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on commitments:
2111 Limitation on guaranteed loans
made by private lenders.........
2131 Guaranteed loan commitments exempt
from limitation................. 199 960 1,191
--------- --------- ----------
2150 Total guaranteed loan
commitments................... 199 960 1,191
----------------------------------------------------------------------------
Cumulative balance of guaranteed loans
outstanding:
2210 Outstanding, start of year........ 506 598 1,313
2231 Disbursements of new guaranteed
loans........................... 199 960 1,191
2251 Repayments and prepayments........ -107 -245 -423
--------- --------- ----------
[[Page 1168]]
2290 Outstanding, end of year........ 598 1,313 2,081
----------------------------------------------------------------------------
Memorandum:
2299 Guaranteed amount of guaranteed
loans outstanding, end of year.. 598 1,313 2,081
---------------------------------------------------------------------------
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0111 Net interest income............... 3 3 2 3
0112 Allocated admin expense........... -3 -3 -1 -2
------------ -------------- ------------ -------------
0119 Net income or loss (-)............ 1 1
0121 Guarantee fee income.............. 2 4 7
0122 Allocated admin expense........... -2 -3 -4
------------ -------------- ------------ -------------
0129 Net income or loss (-)............ 1 3
0131 Gain on issuance of MBS........... 1 3 3
0132 Allocated admin expense........... -2 -2
------------ -------------- ------------ -------------
0139 Net income or loss (-)............ 1 1 1
------------ -------------- ------------ -------------
0199 Net income or loss................ 1 3 5
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Non-Federal assets: Investment in
securities...................... 619 553 650 696
------------ -------------- ------------ -------------
1999 Total assets.................... 619 553 650 696
LIABILITIES:
2203 Non-Federal liabilities: Debt..... 607 538 598 639
------------ -------------- ------------ -------------
2999 Total liabilities............... 607 538 598 639
NET POSITION:
3200 Invested capital.................. 12 15 52 57
------------ -------------- ------------ -------------
3999 Total net position.............. 12 15 52 57
------------ -------------- ------------ -------------
4999 Total liabilities and net position 619 553 650 696
-----------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
11.1 Personnel compensation: Personnel
compensation and benefits....... 2 3 4
25.2 Other services.................... 2 3 4
99.5 Below reporting threshold......... 1
--------- --------- ----------
99.9 Total obligations............... 5 6 8
---------------------------------------------------------------------------
FEDERAL HOME LOAN BANK SYSTEM
Federal Home Loan Banks
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Obligations by program activity:
Operating expenses:
00.01 Administrative expenses
including FHFB assessments.... 240 223 223
00.02 Affordable Housing program...... 115 120 120
00.03 Interest on consolidated
obligations and loss on debt
retirement.................... 13,027 12,500 12,500
00.04 Interest on members' deposits
and other borrowings.......... 982 1,000 1,000
00.05 Payment to REFCORP.............. 300 300 300
00.06 Cash dividends on capital stock. 556 550 550
--------- --------- ----------
00.91 Total operating expenses...... 15,220 14,693 14,693
Capital investment:
01.01 Investment in bank premises..... 9 15 9
01.04 Net increase in advances........ 31,174
01.05 Net increase in investments..... 13,304
01.06 Repurchase of capital stock..... 1,204 1,250 1,250
--------- --------- ----------
01.91 Total capital investment...... 32,387 14,569 1,259
--------- --------- ----------
10.00 Total obligations............... 47,607 29,262 15,952
----------------------------------------------------------------------------
Budgetary resources available for obligation:
21.47 Unobligated balance available,
start of year: Authority to
borrow.......................... 148 94
22.00 New budget authority (gross)...... 47,459 29,357 17,609
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 47,607 29,357 17,703
23.95 New obligations................... -47,607 -29,262 -15,952
24.47 Unobligated balance available, end
of year: Authority to borrow.... 94 1,751
----------------------------------------------------------------------------
New budget authority (gross), detail:
67.15 Authority to borrow (indefinite).. 16,250 11,430
68.00 Spending authority from offsetting
collections: Offsetting
collections (cash).............. 31,209 17,927 17,609
--------- --------- ----------
70.00 Total new budget authority
(gross)....................... 47,459 29,357 17,609
----------------------------------------------------------------------------
Change in unpaid obligations:
Unpaid obligations, start of year:
Obligated balance:
72.41 U.S. Securities: Par value.... 2,630 1,695 1,700
72.47 Authority to borrow (obligated
balance net of U.S. Treasury
and agency securities held). 2,231 3,648 3,437
72.90 Fund balance.................. 449 358 300
--------- --------- ----------
72.99 Total unpaid obligations,
start of year............... 5,310 5,701 5,437
73.10 New obligations................... 47,607 29,262 15,952
73.20 Total outlays (gross)............. -47,216 -29,527 -17,609
Unpaid obligations, end of year:
Obligated balance:
74.41 U.S. Securities: Par value.... 1,695 1,700 1,700
74.47 Authority to borrow........... 3,648 3,437 1,780
74.90 Fund balance.................. 358 300 300
--------- --------- ----------
74.99 Total unpaid obligations, end
of year..................... 5,701 5,437 3,780
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 47,216 29,357 17,609
86.98 Outlays from permanent balances... 170
--------- --------- ----------
87.00 Total outlays (gross)........... 47,216 29,527 17,609
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
Offsetting collections (cash)
from:
Non-Federal sources:
88.40 Collections from non-Federal
sources................... -18,215 -17,625 -17,609
88.40 Net decrease in advances.... -302
88.40 Net decrease in investments. -12,994
--------- --------- ----------
88.90 Total, offsetting
collections (cash)........ -31,209 -17,927 -17,609
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority.................. 16,250 11,430
90.00 Outlays........................... 16,007 11,600
---------------------------------------------------------------------------
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 796,853 800,000 800,000
--------- --------- ----------
1150 Total direct loan obligations... 796,853 800,000 800,000
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 122,128 153,302 153,000
1231 Disbursements: Direct loan
disbursements................... 796,853 800,000 800,000
1251 Repayments: Repayments and
prepayments..................... -765,679 -800,302 -800,000
--------- --------- ----------
1290 Outstanding, end of year........ 153,302 153,000 153,000
---------------------------------------------------------------------------
The 12 Federal Home Loan Banks were chartered by the Federal Home
Loan Bank Board under the authority of the Federal Home Loan Bank Act of
1932 (the Act). The
[[Page 1169]]
FHLBanks are under the supervision of the Federal Housing Finance Board.
The common mission of the FHLBanks is to facilitate the extension of
credit through their members in order to provide access to housing for
all Americans and to improve the quality of their communities. To
accomplish this mission, the FHLBanks make loans, called advances, and
provide other credit products and services to their nearly 6,000 member
commercial banks, savings associations, insurance companies, and credit
unions. Advances and letters of credit must be fully secured by eligible
collateral and long-term advances may be made only for the purpose of
providing funds for residential housing finance. Additionally,
specialized advance programs provide funds for community reinvestment
and affordable housing programs. All regulated financial depositories
and insurance companies engaged in residential housing finance are
eligible for membership. Each FHLBank operates in a geographic district
designated by the Board and together the FHLBanks cover all of the
United States as well as the District of Columbia, Puerto Rico, the
Virgin Islands, and Guam.
Advances outstanding on September 30, 1996 totaled approximately
$153.3 billion, a net increase of approximately $31.2 billion from the
September 30, 1995 level of $122.1 billion.
The principal source of funds for the lending operation is the sale
of consolidated obligations to the public. On September 30, 1996, $243.5
billion of these obligations were outstanding. The consolidated
obligations are not guaranteed by the U.S. Government as to principal or
interest. Other sources of lendable funds include members' deposits and
capital. Deposits totaled $15.4 billion and total capital amounted to
$16.5 billion as of September 30, 1996. Funds not immediately needed for
advances to members are invested.
The capital stock of the Federal Home Loan Banks is owned entirely
by the members. Initially the U.S. Government purchased stock of the
banks in the amount of $125 million. The banks had repurchased the
Government's investment in full by mid-1951.
The operating expenses of the FHLBanks are paid from their own
income and are not included in the budget of the United States. Included
in these expenses are the assessments by the Finance Board to cover its
administrative and other costs. The Finance Board's budget and
expenditures, however, are included in the budget of the United States.
The Act, as amended in 1989, requires each FHLBank to operate an
Affordable Housing Program (AHP). Each FHLBank provides subsidies in the
form of direct grants or below-market rate advances for members that use
the funds for qualifying affordable housing projects. The FHLBank system
sets aside for its AHPs a minimum of $100 million annually. The Act also
requires that the FHLBanks contribute $300 million annually to assist in
the payment of interest on bonds issued by the Resolution Funding
Corportion.
The forecast data for 1997 and 1998 contained in this material
represents estimates and should not be construed as an official forecast
of the FHLBanks System's future position.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 14,568 15,712 15,100 15,100
0102 Expense (excludes payments to
REFCORP)........................ -13,370 -14,364 -13,843 -13,843
------------ -------------- ------------ -------------
0109 Net income........................ 1,198 1,348 1,257 1,257
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:
1102 Federal assets: Treasury
securities, net............... 2,630 1,695 1,700 1,700
Non-Federal assets:
1201 Investments in non-Federal
securities, net............... 134,990 121,996 135,300 135,300
1206 Accounts receivable............. 3,532 3,883 3,800 3,800
1401 Net value of assets related to
direct loans receivable: Direct
loans receivable, gross......... 122,128 153,302 153,000 153,000
Other Federal assets:
1801 Cash and other monetary assets.. 449 358 300 300
1803 Property, plant and equipment,
net........................... 157 156 160 160
1901 Other assets.................... 941 339 300 300
------------ -------------- ------------ -------------
1999 Total assets.................... 264,828 281,728 294,560 294,560
LIABILITIES:
2101 Federal liabilities: REFCORP and
AHP............................. 347 388 390 390
Non-Federal liabilities:
2201 Accounts payable................ 185 234 200 200
2202 Interest payable................ 3,946 4,259 4,200 3,000
2203 Debt............................ 226,406 243,533 255,000 255,000
Other:
2207 Deposit funds and other
borrowings.................. 18,437 16,038 16,000 16,000
2207 Other......................... 832 820 647 190
------------ -------------- ------------ -------------
2999 Total liabilities............... 250,154 265,272 276,437 274,780
NET POSITION:
3200 Invested capital.................. 14,674 16,456 18,123 19,780
------------ -------------- ------------ -------------
3999 Total net position.............. 14,674 16,456 18,123 19,780
------------ -------------- ------------ -------------
4999 Total liabilities and net position 264,828 281,728 294,560 294,560
-----------------------------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1996 actual 1997 est. 1998 est.
----------------------------------------------------------------------------
11.1 Personnel compensation: Full-time
permanent....................... 98 80 80
12.1 Civilian personnel benefits....... 25 26 26
21.0 Travel and transportation of
persons......................... 6 6 6
23.3 Communications, utilities, and
other rent...................... 21 22 22
24.0 Printing and reproduction......... 7 7 7
25.2 Other services.................... 76 75 75
31.0 Equipment......................... 7 7 7
32.0 Land and structures............... 9 15 9
Investments and loans:
33.0 Net increase in advances........ 31,174
33.0 Net increase in investments..... 13,304
41.0 Subsidies (Affordable Housing
Program)........................ 115 120 120
Interest and dividends:
43.0 Interest and cash dividends..... 14,565 14,050 14,050
43.0 REFCORP interest................ 300 300 300
92.0 Repurchase of capital stock
(gross)......................... 1,204 1,250 1,250
--------- --------- ----------
99.9 Total obligations............... 47,607 29,262 15,952
---------------------------------------------------------------------------
Financing Corporation
The Financing Corporation (FICO) is a mixed-ownership government
corporation, chartered by the Federal Home Loan Bank Board pursuant to
the Federal Savings and Loan Insurance Corporation Recapitalization Act
of 1987, as amended (the ``Act''). FICO's sole purpose was to function
as a financing vehicle for the FSLIC Resolution Fund, formerly the
Federal Savings and Loan Insurance Corporation (FSLIC). FICO operates
under the supervision and control of the Federal Housing Finance Board
(the ``Finance Board''). Pursuant to the Act, FICO was authorized to
issue debentures, bonds and other obligations subject to limitations
contained in the Act, the net proceeds of which were to be used solely
to purchase capital certificates issued by the FSLIC Resolution Fund, or
to refund any previously issued obligations. The Resolution Trust
Corporation Refinancing, Restructuring, and Improvement Act of 1991
terminated the FICO's borrowing authority.
The Act provided formulas pursuant to which the Federal Home Loan
Banks made capital contributions to FICO at
[[Page 1170]]
the direction of the Finance Board for the purchase of FICO capital
stock. FICO used the proceeds received from the sales of such capital
stock to purchase non-interest bearing securities for deposit in a
segregated account as required by the Act. The non-interest bearing
securities held in the segregated account will be the primary source of
repayment of the principal of the FICO obligations. Securities in the
segregated account are kept separate from other FICO accounts and funds
but are not specifically pledged as collateral for the payment of
obligations. The primary source of payment of interest on the
obligations is the receipt of assessments imposed on and collected from
institutions' accounts which are insured by the Bank Insurance Fund (the
``BIF'') and the Savings Association Insurance Fund (the ``SAIF'').
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4033-0-3-373 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 897 906 915 926
0102 Expense........................... -795 -795 -795 -795
------------ -------------- ------------ -------------
0109 Net income........................ 102 111 120 131
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4033-0-3-373 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:
1102 Federal assets: Segregated
accounts investment, net...... 1,244 1,355 1,475 1,606
Other Federal assets:
1801 Cash, cash equivalents, and
interest receivable........... 279 281 281 281
1901 Other assets.................... 13 12 12 11
------------ -------------- ------------ -------------
1999 Total assets.................... 1,536 1,648 1,768 1,898
LIABILITIES:
Non-Federal liabilities:
2202 Interest payable................ 236 236 236 236
2203 Debt............................ 8,141 8,142 8,144 8,145
2207 Other........................... 85 85 83 81
------------ -------------- ------------ -------------
2999 Total liabilities............... 8,462 8,463 8,463 8,462
NET POSITION:
3100 FICO capital stock purchased by
FHLBanks........................ 680 680 680 680
Invested capital:
3200 FSLIC capital certificates...... -7,568 -7,568 -7,568 -7,568
3200 FSLIC nonvoting capital stock... -603 -603 -603 -603
3300 Cumulative results of operations.. 565 675 796 927
------------ -------------- ------------ -------------
3999 Total net position.............. -6,926 -6,816 -6,695 -6,564
------------ -------------- ------------ -------------
4999 Total liabilities and net position 1,536 1,647 1,768 1,898
-----------------------------------------------------------------------------------------------
Resolution Funding Corporation
The Resolution Funding Corporation (the ``REFCORP'') is a mixed-
ownership government corporation established by Title V of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The
sole purpose of REFCORP was to provide financing for the Resolution
Trust Corporation (the ``RTC''). Pursuant to FIRREA, REFCORP was
authorized to issue debentures, bonds, and other obligations, subject to
limitations contained in the Act and regulations established by the
Thrift Depositor Protection Oversight Board. The proceeds of the debt
(less any discount, plus any premium, net of issuance cost) were used
solely to purchase nonredeemable capital certificates of the RTC or to
refund any previously issued obligations.
REFCORP is subject to the general oversight and direction of the
Thrift Depositor Protection Oversight Board. The day-to-day operations
of REFCORP are under the management of a three-member Directorate
comprised of the Director of the Office of Finance of the Federal Home
Loan Banks and two members selected by the Oversight Board from among
the presidents of the twelve Federal Home Loan Banks (``the FHLBanks'').
Members of the Directorate serve without compensation, and REFCORP is
not permitted to have any paid employees. REFCORP and its Directorate
are subject to regulations, orders and directions of the Thrift
Depositor Protection Oversight Board.
FIRREA and the regulations adopted by the Thrift Depositor
Protection Oversight Board provide formulas pursuant to which the
Federal Home Loan Banks made capital contributions to REFCORP's
Principal Fund and continue to make interest payments on outstanding
REFCORP obligations. FIRREA also provides that the U.S. Treasury cover
any interest shortfall. Funds designated for the Principal Funds were
used to purchase zero-coupon bonds. The zero-coupon bonds will be held
in the Principal Fund and are the primary source of repayment of the
principal of the obligations at maturity.
Statement of Operations (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4029-0-3-373 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 2,895 2,925 2,942 2,967
0102 Expense........................... -2,626 -2,633 -2,626 -2,626
------------ -------------- ------------ -------------
0109 Net income........................ 269 292 316 341
-----------------------------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4029-0-3-373 1995 actual 1996 actual 1997 est. 1998 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:
1102 Federal assets: Principal fund
account investment, net....... 3,567 3,856 4,168 4,504
1206 Non-Federal assets: Assessments
receivable for interest expense. 881 888 881 881
1901 Other Federal assets: Other assets 1 1
------------ -------------- ------------ -------------
1999 Total assets.................... 4,449 4,745 5,049 5,385
LIABILITIES:
Non-Federal liabilities:
2202 Accrued interest payable on
long-term obligations......... 881 888 881 881
2203 Debt............................ 30,076 30,074 30,072 30,069
------------ -------------- ------------ -------------
2999 Total liabilities............... 30,957 30,962 30,953 30,950
NET POSITION:
3100 Nonvoting capital stock issued to
FHLBanks........................ 2,513 2,513 2,513 2,513
Invested capital:
3200 RTC nonredeemable capital
certificates.................. -31,286 -31,286 -31,286 -31,286
3200 Contributed capital--principal
fund assessments.............. 1,057 1,057 1,057 1,057
3300 Cumulative results of operations.. 1,208 1,499 1,813 2,152
------------ -------------- ------------ -------------
3999 Total net position.............. -26,508 -26,217 -25,903 -25,564
------------ -------------- ------------ -------------
4999 Total liabilities and net position 4,449 4,745 5,050 5,386
-----------------------------------------------------------------------------------------------
BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
Program and Financing (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1995 actual 1996 est. 1997 est.
----------------------------------------------------------------------------
Obligations by program activity:
Board operating expenses:
00.01 Monetary and economic policy.... 72 73 76
00.02 Services to financial
institutions and the public... 3 3 4
00.03 Supervision and regulation of
financial institutions........ 65 66 68
00.04 System policy direction and
oversight..................... 32 33 34
--------- --------- ----------
00.91 Subtotal: Board operating
expenses.................... 172 175 182
01.01 Office of Inspector General
operating expenses.............. 3 3 3
--------- --------- ----------
10.00 Total obligations............... 175 178 185
----------------------------------------------------------------------------
[[Page 1171]]
Budgetary resources available for obligation:
21.40 Unobligated balance available,
start of year: Uninvested
balance......................... -3 -2 -8
22.00 New budget authority (gross)...... 176 172 185
--------- --------- ----------
23.90 Total budgetary resources
available for obligation...... 173 170 177
23.95 New obligations................... -175 -178 -185
24.40 Unobligated balance available, end
of year: Uninvested balance..... -2 -8 -8
----------------------------------------------------------------------------
New budget authority (gross), detail:
68.00 Spending authority from offsetting
collections (gross): Offsetting
collections (cash).............. 176 172 185
----------------------------------------------------------------------------
Change in unpaid obligations:
72.40 Unpaid obligations, start of year:
Obligated balance: Appropriation 18 18 18
73.10 New obligations................... 175 178 185
73.20 Total outlays (gross)............. -175 -178 -185
74.40 Unpaid obligations, end of year:
Obligated balance: Appropriation 18 18 18
----------------------------------------------------------------------------
Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 160 162 175
86.98 Outlays from permanent balances... 15 16 10
--------- --------- ----------
87.00 Total outlays (gross)........... 175 178 185
----------------------------------------------------------------------------
Offsets:
Against gross budget authority and outlays:
88.40 Offsetting collections (cash)
from: Non-Federal sources..... -176 -172 -185
----------------------------------------------------------------------------
Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays........................... -1 6
---------------------------------------------------------------------------
The figures presented may differ from other Board financial material
because they are prepared in accordance with OMB guidelines which vary
from the Board's budget and accounting procedures.
The Federal Reserve System operates under the provisions of the
Federal Reserve Act of 1913, as amended, and other acts of Congress.
Program.--To carry out its responsibilities under the Act, the Board
determines general monetary, credit, and operating policies for the
System as a whole and formulates the rules and regulations necessary to
carry out the purposes of the Federal Reserve Act. The Board's principal
duties consist of exerting an influence over credit conditions and
supervising the Federal Reserve banks and member banks.
Financing.--Under the provisions of section 10 of the Federal
Reserve Act, the Board of Governors levies upon the Federal Reserve
banks, in proportion to their capital and surplus, an assessment
sufficient to pay its estimated expenses. The Board, under the Act,
determines and prescribes the manner in which its obligations are
incurred and its expenses paid. Funds derived from assessments are
deposited in the Federal Reserve Bank of Richmond, and the Act provides
that such funds ``shall not be construed to be Government funds or
appropriated moneys.'' No Government appropriation is required to
support operations of the Board.
The information presented pertains to Board operations only.
Expenditures made on behalf of the Federal Reserve banks for production,
issuance, retirement, and shipment of Federal Reserve notes are not
included, since they are reimbursed in full by the Federal Reserve
banks.
Statement of Operations (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1995 actual 1996 est. 1997 est.
----------------------------------------------------------------------------
0101 Revenue........................... 171 176 172
0102 Expense........................... -174 -175 -178
--------- --------- ----------
0109 Net income or loss (-)............ -3 1 -6
---------------------------------------------------------------------------
Balance Sheet (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1995 actual 1996 est. 1997 est.
----------------------------------------------------------------------------
ASSETS:
1206 Non-Federal assets: Receivables,
net............................. 3 3 3
Other Federal assets:
1801 Cash in bank.................... 15 16 10
1803 Property, plant and equipment,
net........................... 125 119 129
--------- --------- ----------
1999 Total assets.................... 143 138 142
LIABILITIES:
2201 Non-Federal liabilities: Accounts
payable and accrued liabilities. 24 21 21
--------- --------- ----------
2999 Total liabilities............... 24 21 21
NET POSITION:
3100 Appropriated capital.............. -6 -2 -8
3200 Invested capital.................. 125 119 129
--------- --------- ----------
3999 Total net position.............. 119 117 121
--------- --------- ----------
4999 Total liabilities and net position 143 138 142
---------------------------------------------------------------------------
Object Classification (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1995 actual 1996 est. 1997 est.
----------------------------------------------------------------------------
Reimbursable obligations:
Personnel compensation:
11.1 Full-time permanent........... 95 100 104
11.3 Other than full-time permanent 1 1 1
11.5 Other personnel compensation.. 2 2 2
--------- --------- ----------
11.9 Total personnel compensation 98 103 107
12.1 Civilian personnel benefits..... 16 17 17
21.0 Travel and transportation of
persons....................... 5 5 5
23.3 Communications, utilities, and
miscellaneous charges......... 9 10 10
24.0 Printing and reproduction....... 3 3 3
25.1 Advisory and assistance services 1 2 2
25.2 Other services.................. 18 17 18
26.0 Supplies and materials.......... 5 6 6
31.0 Equipment....................... 17 12 14
99.0 Subtotal, reimbursable obligations 172 175 182
25.2 Allocation Account: Other services 3 3 3
--------- --------- ----------
99.9 Total obligations............... 175 178 185
---------------------------------------------------------------------------
Personnel Summary
----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1995 actual 1996 est. 1997 est.
----------------------------------------------------------------------------
Total compensable workyears:
2005 Full-time equivalent of overtime
and holiday hours............... 38 38 38
2011 Exempt Full-time equivalent
employment...................... 1,661 1,683 1,733
---------------------------------------------------------------------------
\1\ Includes 32, 32, and 32 positions respectively for the Office of
Inspector General.