Appendix - Financing Vehicles and the Board of Governors of the Federal Reserve

[Appendix]
[Financing Vehicles and the Board of Governors of the Federal Reserve ]
[From the U.S. Government Printing Office, www.gpo.gov]

This chapter contains descriptions of and data on financing vehicles
and the Board of Governors of the Federal Reserve listed below.

--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 provided financing for the
Resolution Trust Corporation (RTC) and is subject to the general
oversight and direction of the Secretary of the Treasury.

The Board of Governors of the Federal Reserve System's transactions
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.

FINANCING VEHICLES

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 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)

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99-4033 1998 actual 1999 actual 2000 est. 2001 est.
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0101 Revenue........................... 926 938 951 965
0102 Expense........................... -795 -795 -795 -796
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 131 143 156 169
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Balance Sheet (in millions of dollars)

1102 Segregated accounts investment,
net........................... 1,606 1,749 1,905 2,074
1801 Cash, cash equivalents, and
interest receivable............. 266 266 269 269
1901 Other assets...................... 11 11 10 10
------------ -------------- ------------ -------------
1999 Total assets.................... 1,884 2,026 2,184 2,353
LIABILITIES:
2202 Interest payable.................. 236 236 236 236
2203 Debt.............................. 8,145 8,146 8,147 8,149
2207 Other............................. 67 65 67 65
------------ -------------- ------------ -------------
2999 Total liabilities............... 8,447 8,447 8,450 8,449
NET POSITION:
3100 FICO capital stock purchased by
FHLBanks........................ 680 680 680 680
Cumulative results of operations:

3300 Cumulative results of operations 927 1,069 1,225 1,394
3300 FSLIC capital certificates...... -8,170 -8,170 -8,170 -8,170
------------ -------------- ------------ -------------
3999 Total net position.............. -6,563 -6,421 -6,265 -6,096
------------ -------------- ------------ -------------
4999 Total liabilities and net position 1,884 2,026 2,185 2,353
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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.
Until October 29, 1998, REFCORP was subject to the general oversight
and direction of the Thrift Depositor Protection Oversight Board. At
that time, the Oversight Board was abolished and its authority and
duties were transferred to the Secretary of the Treasury. 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 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.

FIRREA and the regulations adopted by the Thrift Depositor
Protection Oversight Board and the Secretary of the Treasury 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.

[[Page 1250]]

Statement of Operations (in millions of dollars)

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99-4029 1998 actual 1999 actual 2000 est. 2001 est.
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0101 Revenue........................... 2,965 2,995 3,023 3,054
0102 Expense........................... -2,626 -2,626 -2,626 -2,626
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 339 369 397 428
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Balance Sheet (in millions of dollars)

1102 Principal fund account
investment, net............... 4,504 4,868 5,263 5,689
1206 Assessments receivable for
interest expense................ 888 881 881 881
------------ -------------- ------------ -------------
1999 Total assets.................... 5,393 5,750 6,144 6,570
LIABILITIES:
2202 Accrued interest payable on long-
term obligations................ 888 881 881 881
2203 Debt.............................. 30,069 30,067 30,064 30,062
------------ -------------- ------------ -------------
2999 Total liabilities............... 30,957 30,948 30,945 30,943
NET POSITION:
3100 Nonvoting capital stock issued to
FHLBanks........................ 2,513 2,513 2,513 2,513
Cumulative results of operations:

3300 Cumulative results of operations 2,153 2,519 2,916 3,344
3300 RTC nonredeemable capital
certificates.................. -31,286 -31,286 -31,286 -31,286
3300 Contributed capital--principal
fund assessments.............. 1,056 1,056 1,056 1,056
------------ -------------- ------------ -------------
3999 Total net position.............. -25,564 -25,198 -24,801 -24,373
------------ -------------- ------------ -------------
4999 Total liabilities and net position 5,393 5,750 6,144 6,570
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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Program and Financing (in millions of dollars)

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99-4450 1998 actual 1999 est. 2000 est.
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Obligations by program activity:
09.01 Monetary and economic policy...... 81 80 85
09.02 Services to financial institutions
and the public.................. 3 4 4
09.03 Supervision and regulation of
financial institutions.......... 67 71 78
09.04 System policy direction and
oversight....................... 35 36 35
--------- --------- ----------
09.09 Subtotal: Board operating
expenses...................... 186 191 202
09.10 Office of Inspector General
operating expenses.............. 3 3 3
--------- --------- ----------
10.00 Total new obligations........... 189 194 205
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Budgetary resources available for obligation:
22.00 New budget authority (gross)...... 189 194 205
23.95 Total new obligations............. -189 -194 -205
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New budget authority (gross), detail:
Mandatory:

69.00 Offsetting collections (cash)... 189 194 205
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Change in unpaid obligations:
72.40 Unpaid obligations, start of year:
Obligated balance, start of year
73.10 Total new obligations............. 189 194 205
73.20 Total outlays (gross)............. -189 -194 -205
74.40 Unpaid obligations, end of year:
Obligated balance, end of year..
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Outlays (gross), detail:
86.97 Outlays from new mandatory
authority....................... 189 194 205
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Offsets:
Against gross budget authority and outlays:

88.40 Offsetting collections (cash)
from: Non-Federal sources..... -189 -194 -205
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Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................
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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.

Object Classification (in millions of dollars)

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99-4450 1998 actual 1999 est. 2000 est.
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Reimbursable obligations:

Personnel compensation:
11.1 Full-time permanent........... 104 110 114
11.3 Other than full-time permanent 2 2 2
11.5 Other personnel compensation.. 2 2 2
--------- --------- ----------
11.9 Total personnel compensation 108 114 118
12.1 Civilian personnel benefits..... 19 17 18
21.0 Travel and transportation of
persons....................... 5 5 5
23.3 Communications, utilities, and
miscellaneous charges......... 10 10 11
24.0 Printing and reproduction....... 2 3 2
25.1 Advisory and assistance services 4 4 4
25.2 Other services.................. 21 20 21
26.0 Supplies and materials.......... 6 8 7
31.0 Equipment....................... 11 10 16
--------- --------- ----------
99.0 Subtotal, reimbursable
obligations................. 186 191 202
25.2 Allocation Account: Other services 3 3 3
--------- --------- ----------
99.9 Total new obligations........... 189 194 205
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