[Appendix]
[Government-Sponsored Enterprises]
[From the U.S. Government Printing Office, www.gpo.gov]
[[Page 1203]]
GOVERNMENT-SPONSORED ENTERPRISES
This chapter contains descriptions of the data on the Government-
sponsored enterprises listed below. These enterprises were established
and chartered by the Federal Government for public policy purposes. They
are not included in the Federal budget because they are private
companies, and their securities are not backed by the full faith and
credit of the Federal Government. However, because of their public
purpose, detailed statements of financial 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 Federal National Mortgage Association and the Federal Home
Loan Mortgage Corporation provide assistance to the secondary
market for residential mortgages.
--The Federal Home Loan Banks assist thrift institutions, banks,
insurance companies, and credit unions in providing financing
for housing and community development.
--Institutions of the Farm Credit System the 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 rural
housing loans as well as for farm and business loans guaranteed
by the U.S. Department of Agriculture.
STUDENT LOAN MARKETING ASSOCIATION
Student Loan Marketing Association
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 14,146
--------- --------- ----------
1150 Total direct loan obligations..... 14,146
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 41,932
1231 Disbursements: Direct loan
disbursements................... 14,146
Repayments:
1251 Repayments and prepayments...... -1,889
1252 Proceeds from loan asset sales
or discounted................. -26,266
1264 Write-offs for default: Other
adjustments, net................
--------- --------- ----------
1290 Outstanding, end of year........ 27,923
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
The Student Loan Marketing Association (Sallie Mae) was created as a
shareholder-owned government sponsored enterprise (GSE) 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 was reorganized in 1997 pursuant to the authority
granted by the Student Loan Marketing Association Reorganization Act of
1996. Under the Reorganization Act, the GSE became a wholly owned
subsidiary of SLM Corporation and must wind down and be liquidated by
September 30, 2008. In January 2002, the GSE's board of directors
announced that it expects to complete the dissolution of the GSE by
September 30, 2006. Under legislation passed in 1998, if SLM Corporation
(then named USA Education, Inc.) affiliates with a depository
institution, the GSE must wind down within two years (unless such period
is extended by the Department of the Treasury).
The GSE 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. The GSE is
authorized, at the request of Federal officials, to make insured loans
directly to students as a lender of last resort. The GSE is authorized
to advance funds to State agencies that will provide loans to students.
The GSE 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. As described below, however, many of these
activities are limited or precluded under the privatization legislation.
The GSE 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.
Generally, under the privatization legislation, the GSE cannot
engage in any new business activities or acquire any additional program
assets other than purchasing student loans and serving, at the request
of the Secretary of Education, as a lender of last resort. The GSE can
continue to make warehousing advances under contractual commitments
existing on August 7, 1997.
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]
2003 actual 2004 est. 2005 est.
Guaranteed student loans:
Stafford:
Purchased....................... 8,864 7,178 1,238
Warehoused...................... 253 -- --
PLUS/SLS: Purchased............... 919 885 153
------------------------------------
Subtotal, Guaranteed student
loans....................... 10,036 8,063 1,391
Other............................... 4,110 4,845 836
------------------------------------
Total......................... 14,146 12,908 2,227
====================================
Financing.--The GSE is financed by borrowing in the private debt
markets and securitizing its assets. The GSE must wind down and be
liquidated by September 30, 2008 although the GSE has announced that it
expects to complete the wind-down and liquidation two years earlier. All
obligations of the GSE remaining upon liquidation must be placed into a
defea
[[Page 1204]]
sance trust. The GSE's outstanding adjustable rate cumulative preferred
stock, which was required to be redeemed prior to such date was redeemed
on December 10, 2001.
The financial data contained in this material relating to future
periods represents estimates that have been prepared specifically for
inclusion in the President's Budget. These data should not be viewed as
official forecasts 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.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-1500-0-3-502 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:
1102 Treasury securities, par........ 1,727 1,731
1104 Agency securities, par..........
1106 Receivables, net................ 953 429
1201 Investments in other securities,
net............................. 2,442 1,408
1206 Receivables, net.................. 1,865 29
1207 Advances and prepayments.......... 58 9
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 42,094 27,971
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -162 -48
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 41,932 27,923
1801 Cash and other monetary assets.... 70 12
1803 Property, plant and equipment, net
*...............................
1901 Other assets...................... 524 224
------------ -------------- ------------ -------------
1999 Total assets.................... 49,571 31,765
LIABILITIES:
2202 Interest payable.................. 311 265
2203 Debt.............................. 45,720 26,821
2207 Other............................. 1,633 2,331
------------ -------------- ------------ -------------
2999 Total liabilities............... 47,664 29,417
NET POSITION:
3300 Invested Capital.................. 1,907 2,348
------------ -------------- ------------ -------------
3999 Total net position.............. 1,907 2,348
------------ -------------- ------------ -------------
4999 Total liabilities and net position 49,571 31,765
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
* In the first quarter of 2001, in accordance with the Privatization
Act, the GSE transferred substantially all of its fixed assets and real
estate to certain private non-GSE entities in USA education.
FEDERAL NATIONAL MORTGAGE ASSOCIATION
Portfolio Programs
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 627,557
--------- --------- ----------
1150 Total direct loan obligations..... 627,557
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 759,733
Disbursements:
1231 Direct loan disbursements....... 656,912
1232 Purchase of loans assets........ 5,512
1251 Repayments: Repayments and
prepayments..................... -493,141
1264 Write-offs for default: Other
adjustments, net................ -6,344
--------- --------- ----------
1290 Outstanding, end of year........ 922,672
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
The Federal National Mortgage Association (Fannie Mae) is a
Government-sponsored enterprise (GSE) in the housing finance market. On
September 10, 2003 and October 16, 2003, the Secretaries of the
Departments of Housing and Urban Development and the Treasury announced
a proposal to strengthen regulation of all the housing GSEs, including
Fannie Mae.
As a housing GSE, Fannie Mae is a federally-chartered, privately-
owned company with a public mission to provide stability and to 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, Fannie Mae
engages primarily in two forms of business: investing in portfolios of
residential mortgages and guaranteeing residential mortgage securities.
As of September 30, 2003, Fannie Mae held a net mortgage portfolio
totaling $917 billion and had net outstanding guaranteed mortgage-backed
securities of $1,211 billion.
Through a federal charter, Congress has equipped Fannie Mae with
certain attributes to help it carry out its public mission. These
include an exemption from state and local taxes (except real property
taxes), and an exemption of its debt and mortgage securities from
Securities and Exchange Commission registration requirements. An
additional advantage is that the Secretary of the Treasury may purchase
and hold up to $2.25 billion of securities issued by Fannie Mae under
terms and conditions and at prices determined by the Secretary to be
appropriate. 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, is 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.''
[[Page 1205]]
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-2500-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1101 Fund balances..................... 10 46
Investments in US securities:
1102 Treasury securities, par........ 1,600 1,150
1104 Other........................... 51,758 51,525
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans (net of discount).. 728,723 902,445
1602 Federal Agencies................ 29,428 18,813
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -220 -86
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 757,931 921,172
1801 Cash and other monetary assets.... 26,141 45,003
1803 Property, plant and equipment, net 271 275
------------ -------------- ------------ -------------
1999 Total assets.................... 837,711 1,019,171
LIABILITIES:
2101 Accounts payable.................. 702 1,449
2102 Accrued interest payable.......... 9,248 9,139
2105 Other............................. 16 18
2203 Debt.............................. 800,255 975,734
2204 Estimated liability for loan
guarantees...................... 12,081 15,602
2206 Pension and other actuarial
liabilities..................... 444 487
2207 Subtotal, Federal taxes payable... 1 -782
------------ -------------- ------------ -------------
2999 Total liabilities............... 822,747 1,001,647
NET POSITION:
3300 Cumulative results of operations.. 28,779 49,425
3300 Change in Stockholder Equity...... -13,815 -31,901
------------ -------------- ------------ -------------
3999 Total net position.............. 14,964 17,524
------------ -------------- ------------ -------------
4999 Total liabilities and net position 837,711 1,019,171
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
mortgage-backed securities
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 1,255,963
--------- --------- ----------
1150 Total direct loan obligations..... 1,255,963
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 1,458,945
1231 Disbursements: Direct loan
disbursements................... 1,255,963
1251 Repayments: Repayments and
prepayments..................... -913,380
--------- --------- ----------
1290 Outstanding, end of year........ 1,801,528
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
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.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-2501-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 1,459,533 1,802,241
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -588 -713
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 1,458,945 1,801,528
------------ -------------- ------------ -------------
1999 Total assets.................... 1,458,945 1,801,528
LIABILITIES:
2104 Resources payable................. 1,458,945 1,801,528
------------ -------------- ------------ -------------
2999 Total liabilities............... 1,458,945 1,801,528
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
FEDERAL HOME LOAN MORTGAGE CORPORATION
Portfolio Programs
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........
1231 Disbursements: Direct loan
disbursements...................
1251 Repayments: Repayments and
prepayments.....................
--------- --------- ----------
1290 Outstanding, end of year........
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
The Federal Home Loan Mortgage Corporation (Freddie Mac) is a
Government-sponsored enterprise (GSE) in the housing finance market. On
September 10, 2003 and October 16, 2003, the Secretaries of the
Departments of Housing and Urban Development and the Treasury announced
a proposal to strengthen regulation of all the housing GSEs, including
Freddie Mac.
As a housing GSE, Freddie Mac is a federally-charted, shareholder-
owned, private 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.
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), and an exemption for its debt and
mortgage securities from SEC filing registration requirements. An
additional advantage is that the Secretary of the Treasury may purchase
and hold up to $2.25 billion of securities issued by Freddie Mac under
terms and conditions and at prices determined by the Secretary to be
appropriate. Securities guaranteed by Freddie Mac and debt issued by the
company are explicitly not backed by the full faith and credit of the
U.S. Government. The common stock of the corporation is owned by private
shareholders is fully transferable, and trades on the New York and
Pacific stock exchanges.
[[Page 1206]]
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 serves as a conduit facilitating the flow of
investment dollars from the capital markets to mortgage lenders, and
ultimately, to homebuyers.
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. In addition, FIRREA converted
Freddie Mac's 60 million shares of non-voting, senior participating
preferred stock into voting common stock.
Financial data for Freddie Mac is not presented here because the
company has not yet reported financial results for 2003. In addition, on
November 21, 2003, Freddie Mac announced the results of its restatement
of previously issued consolidated financial statements for the years
2000 and 2001 and the first three quarters of 2002 and the revision of
fourth quarter and full-year consolidated financial statements for 2002
(collectively referred to as the ``restatement''). This restatement has
changed the data provided last year in the 2004 Budget. Restated data
for 2002 has not yet been audited.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4420-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Investments in other securities,
net.............................
1206 Receivables, net..................
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Retained mortgage inventory.....
1603 Allowances (-)..................
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................
1801 Cash and other monetary assets....
1803 Property, plant and equipment, net
1901 Other assets......................
------------ -------------- ------------ -------------
1999 Total assets....................
LIABILITIES:
2101 Accounts payable..................
2202 Interest payable..................
2203 Debt..............................
2207 Other Liabilities.................
------------ -------------- ------------ -------------
2999 Total liabilities...............
NET POSITION:
3100 Invested capital..................
------------ -------------- ------------ -------------
3999 Total net position..............
------------ -------------- ------------ -------------
4999 Total liabilities and net position
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
Mortgage-Backed Securities
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1131 Direct loan obligations...........
--------- --------- ----------
1150 Total direct loan obligations.....
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........
1231 Disbursements: Direct loan
disbursements...................
1251 Repayments: Repayments and
prepayments.....................
--------- --------- ----------
1290 Outstanding, end of year........
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4440-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1901 Underlying Mortgages..............
------------ -------------- ------------ -------------
1999 Total assets....................
LIABILITIES:
2104 Resources payable.................
------------ -------------- ------------ -------------
2999 Total liabilities...............
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
FEDERAL HOME LOAN BANK SYSTEM
Federal Home Loan Banks
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1111 Limitation on direct loans........
1131 Direct loan obligations........... 5,625,130
----------- ----------- ----------
1150 Total direct loan obligations..... 5,625,130
-------------------------------------------------------------------------
Cumulative balance of direct loans outstanding:
1210 Outstanding, start of year........ 537,812
1231 Disbursements: Direct loan
disbursements................... 5,625,130
1251 Repayments: Repayments and
prepayments..................... -5,545,018
1264 Write-offs for default: Other
adjustments, net................ -4,018
----------- ----------- ----------
1290 Outstanding, end of year........ 613,906
----------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
The Federal Home Loan Bank System is a Government-sponsored
enterprise (GSE) in the housing finance market. On September 10, 2003
and October 16, 2003, the Secretaries of the Departments of Housing and
Urban Development and the Treasury announced a proposal to strengthen
regulation of all the housing GSEs, including the Federal Home Loan Bank
System.
The 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 12 Federal Home Loan Banks (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. To accomplish this mission, the FHLBanks make loans, called
advances, and provide other credit products and services to their 7,992
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. However,
``community financial institutions'' may also use long-term advances to
finance small businesses, small farms, and small agribusinesses.
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, Guam, American Samoa, and the Northern
Mariana Islands.
[[Page 1207]]
Advances outstanding on September 30, 2003 totaled approximately
$506 billion, a net increase of approximately $15 billion from the
September 30, 2002 level of $491 billion.
The principal source of funds for the lending operation is the sale
of consolidated obligations to the public. On September 30, 2003, $717
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 $31 billion and total capital amounted to $39
billion as of September 30, 2003. 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 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 the greater of $100 million annually or 10
percent of net income. The Act, as amended in 1999, also requires that
the FHLBanks contribute 20 percent of net earnings annually to assist in
the payment of interest on bonds issued by the Resolution Funding
Corporation.
In 2002, the Administration requested all GSEs, including the FHLBs,
to voluntarily register their equity securities with the Securities and
Exchange Commission (SEC). This voluntary registration is part of the
Administration's efforts to have GSEs undergo the same scrutiny process
as other corporate enterprises. The FHLBs have still not registered with
the SEC, and, as a result, their financial statements are not subject to
the same level of transparency and review as public companies. (Freddie
Mac similarly has failed to commence registration with the SEC, in spite
of its prior commitment to do so. Fannie Mae registered with the SEC
effective March 31, 2003.)
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Investments in US securities:
1102 Treasury securities, net........ 206 220
1201 Investments in other securities,
net............................. 215,261 186,194
1206 Accounts receivable............... 3,014 2,657
1401 Net value of assets related to
direct loans receivable: Direct
loans receivable, gross......... 537,812 613,893
1801 Cash and other monetary assets.... 573 791
1803 Property, plant and equipment, net 140 165
1901 Other assets...................... 4,223 5,423
------------ -------------- ------------ -------------
1999 Total assets.................... 761,229 809,343
LIABILITIES:
2101 REFCORP and Affordable Housing
Program......................... 822 801
2202 Interest payable.................. 5,383 4,759
2203 Debt.............................. 667,561 716,886
2207 Deposit funds and other borrowings 30,197 31,138
2207 Other............................. 21,312 16,915
------------ -------------- ------------ -------------
2999 Total liabilities............... 725,275 770,499
NET POSITION:
3100 Invested capital.................. 35,954 38,844
------------ -------------- ------------ -------------
3999 Total net position.............. 35,954 38,844
------------ -------------- ------------ -------------
4999 Total liabilities and net position 761,229 809,343
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
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)
Agricultural Credit Bank (ACB), (2) Farm Credit Banks (FCB), and (3)
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 financed by assessments of system institutions and the
Federal Agricultural Mortgage Corporation. System banks finance loans
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 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.
Agricultural Credit Bank
CoBank, ACB is headquartered in Denver, Colorado and serves eligible
cooperatives nationwide, and provides funding to Agricultural Credit
Associations (ACAs) in two of its regions. CoBank, ACB is the only
Agricultural Credit Bank (ACB) in the Farm Credit System. An ACB
operates under statutory authority that combines the authorities of a
Farm Credit Bank (FCB) and a Bank for Cooperatives (BC). In exercising
its FCB authority, CoBank ACB's charter limits its lending to ACAs
located in the northeast and northwest regions of the country. As an
entity lending to Cooperatives, CoBank 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). CoBank also makes loans to rural utilities,
including telecommunications companies 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 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1111 Limitation on direct loans........
1131 Direct loan obligations........... 66,556
--------- --------- ----------
1150 Total direct loan obligations..... 66,556
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 20,466
1231 Disbursements: Direct loan
disbursements................... 66,518
1251 Repayments: Repayments and
prepayments..................... -63,486
Write-offs for default:
1263 Direct loans.................... -35
1264 Other adjustments, net..........
--------- --------- ----------
1290 Outstanding, end of year........ 23,463
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Cash and investment securities.... 5,269 5,916
1206 Accrued interest receivable on
loans........................... 135 112
[[Page 1208]]
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 20,466 23,463
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -379 -435
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 20,087 23,028
1803 Property, plant and equipment, net 476 428
------------ -------------- ------------ -------------
1999 Total assets.................... 25,967 29,484
LIABILITIES:
2104 Resources payable................. 417 309
2201 Consolidated systemwide and other
bank bonds...................... 22,513 25,448
2201 Notes payable and other interest-
bearing liabilities............. 601 1,003
2202 Accrued interest payable.......... 149 132
------------ -------------- ------------ -------------
2999 Total liabilities............... 23,680 26,892
NET POSITION:
3300 Cumulative results of operations.. 2,287 2,592
------------ -------------- ------------ -------------
3999 Total net position.............. 2,287 2,592
------------ -------------- ------------ -------------
4999 Total liabilities and net position 25,967 29,484
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
Statement of Changes in Net Worth (in millions of dollars)
-----------------------------------------------------------------------------------------------
99-4130 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 2,199 2,287 2,592 2,688
============ ============== ============ =============
Capital stock and participations
issued.............................. 0 229 0 0
Capital stock and participations
retired............................. 72 102 80 72
Net income............................ 232 256 267 275
Cash/Dividends/Patronage Distributions (79) (92) (91) (94)
Other, net............................ 7 14 0 0
------------ -------------- ------------ -------------
Ending balance of net worth............. 2,287 2,592 2,688 2,797
-----------------------------------------------------------------------------------------------
Financing Activities (in millions of dollars)
-----------------------------------------------------------------------------------------------
99-4130 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
Beginning balance of outstanding system
obligations......................... 21,275 22,513 25,448 26,619
============ ============== ============ =============
Consolidated systemwide and other bank
bonds issued........................ 9,680 13,958 10,000 11,000
Consolidated systemwide and other bank
bonds retired....................... 8,252 8,974 8,929 9,980
Consolidated systemwide notes, net.... 12 (1,756) 100 100
Other (Net)........................... (201) (292) 0 0
------------ -------------- ------------ -------------
Ending balance of outstanding system
obligations......................... 22,513 25,448 26,619 27,739
-----------------------------------------------------------------------------------------------
Farm Credit Banks
Status of Direct Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
1111 Limitation on direct loans........
1131 Direct loan obligations........... 74,678
--------- --------- ----------
1150 Total direct loan obligations..... 74,678
----------------------------------------------------------------------------
Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 58,165
1231 Disbursements: Direct loan
disbursements................... 76,160
1251 Repayments: Repayments and
prepayments..................... -75,973
1264 Write-offs for default: Other
adjustments, net................ 1
--------- --------- ----------
1290 Outstanding, end of year........ 58,353
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
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 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 have continued to date. As a
result of this restructuring activity, 4 FCBs headquartered in the
following cities, remain: AgFirst FCB, Columbia, South Carolina;
AgriBank FCB, St. Paul, Minnesota; U.S. Ag Bank, FCB, Wichita, Kansas;
and FCB of Texas, Austin, Texas.
The FCBs serve as discount banks and as of October 1, 2003 provided
funds to 13 Federal Land Credit Associations (FLCA) and 86 Agricultural
Credit Associations (ACAs). These direct lender associations, in turn,
make short-term production loans and long-term real estate loans to
eligible farmers and ranchers. 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.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-3-371 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Cash and investment securities.... 10,514 13,931
1206 Accrued Interest Receivable....... 530 382
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:
1601 Direct loans, gross............. 58,169 58,353
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -153 -151
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 58,016 58,202
1803 Property, plant and equipment, net 412 408
------------ -------------- ------------ -------------
1999 Total assets.................... 69,472 72,923
LIABILITIES:
2104 Resources payable................. 513 335
2201 Consolidated systemwide and other
bank bonds...................... 63,794 67,640
2201 Notes payable and other interest-
bearing liabilities............. 370 409
2202 Accrued interest payable.......... 367 355
------------ -------------- ------------ -------------
2999 Total liabilities............... 65,044 68,739
NET POSITION:
3300 Cumulative results of operations.. 4,428 4,184
------------ -------------- ------------ -------------
3999 Total net position.............. 4,428 4,184
------------ -------------- ------------ -------------
4999 Total liabilities and net position 69,472 72,923
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
[[Page 1209]]
Statement of Changes in Net Worth (in millions of dollars)
-----------------------------------------------------------------------------------------------
99-4160 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 4,437 4,428 4,184 4,959
============ ============== ============ =============
Capital stock and participations
issued.............................. 80 518 519 85
Capital stock and participations
retired............................. 260 186 58 39
Surplus Retired....................... 2 1 (230) 0
Net income............................ 516 369 357 403
Cash/Dividends/Patronage Distributions (247) (383) (272) (268)
Other, net............................ (97) (560) 0 0
------------ -------------- ------------ -------------
Ending balance of net worth............. 4,428 4,184 4,959 5,140
-----------------------------------------------------------------------------------------------
Financing Activities (in millions of dollars)
--------------------------------------------------------------------
99-4160 2002 actual 2003 actual 2004 est. 2005 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 58,010 63,794 67,641 80,348
============== ============== ============= ==============
Consolidated systemwide and other bank
bonds issued........................ 50,737 55,816 52,723 54,522
Consolidated systemwide and other bank
bonds retired....................... 44,692 45,027 47,553 48,581
Consolidated systemwide notes, net.... (262) (6,942) 7,537 (2,280)
-------------- -------------- ------------- --------------
Ending balance of outstanding system
obligations........................... 63,794 67,641 80,348 84,009
-------------------------------------------------------------------------------------------------------
Federal Agricultural Mortgage Corporation
(Farmer Mac)
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.
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 United States Department of Agriculture (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, 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 (1996 Act) 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
poolers as had been required under its original authority. The 1996 Act
expanded FCA's regulatory authority to include provisions for
establishing a conservatorship or receivership, if necessary, and
provided for increased core capital requirements at Farmer Mac phased in
over three years.
Farmer Mac operates through two core programs, ``Farmer Mac I,''
which involves mortgage loans secured by first liens on agricultural
real estate or rural housing (qualified loans), and ``Farmer Mac II,''
which involves the guaranteed portions of USDA guaranteed loans. Farmer
Mac operates by: (i) purchasing, or committing to purchase, newly
originated or existing qualified loans or guaranteed portions from
lenders; (ii) purchasing ``AgVantage'' bonds backed by qualified loans
or guaranteed portions from lenders; and (iii) 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.
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 come from
several sources: sale of common and preferred stock; issuance of debt
obligations; and net income from operations. 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.
As of September 30, 2003, Farmer Mac's core capital exceeded
statutory requirements. Additionally, Farmer Mac's regulatory capital
(core capital plus the allowance for loan loses) exceeded the amount of
required regulatory capital as determined by the risk-based capital
rule, with which Farmer Mac was required to be in compliance on May 23,
2002.
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''.
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 the supervision,
examination of and rulemaking for Farmer Mac.
Status of Guaranteed Loans (in millions of dollars)
----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 2003 actual 2004 est. 2005 est.
----------------------------------------------------------------------------
2131 Guaranteed loan commitments....... 1,000
--------- --------- ----------
2150 Total guaranteed loan commitments. 1,000
----------------------------------------------------------------------------
Cumulative balance of guaranteed loans
outstanding:
2210 Outstanding, start of year........ 6,000
2231 Disbursements of new guaranteed
loans........................... 1,000
2251 Repayments and prepayments........ -1,000
--------- --------- ----------
2290 Outstanding, end of year........ 6,000
----------------------------------------------------------------------------
Memorandum:
2299 Guaranteed amount of guaranteed
loans outstanding, end of year.. 6,000
---------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.
Balance Sheet (in millions of dollars)
-----------------------------------------------------------------------------------------------
Identification code 99-4180-0-3-351 2002 actual 2003 actual 2004 est. 2005 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Investment in securities.......... 853 1,083
1206 Receivables, net.................. 4 39
1207 Advances and prepayments.......... 18 18
Net value of assets related to
direct loans receivable:
1401 Direct loans receivable, gross.. 2,198 2,501
1402 Interest receivable............. 55 42
------------ -------------- ------------ -------------
1499 Net present value of assets
related to direct loans..... 2,253 2,543
1801 Cash and other monetary assets.... 100 513
------------ -------------- ------------ -------------
1999 Total assets.................... 3,228 4,196
[[Page 1210]]
LIABILITIES:
2201 Accounts payable.................. 7 98
2202 Interest payable.................. 21 30
2203 Debt.............................. 3,074 3,838
2204 Liabilities for loan guarantees... 11 26
------------ -------------- ------------ -------------
2999 Total liabilities............... 3,113 3,992
NET POSITION:
3300 Invested capital.................. 115 204
------------ -------------- ------------ -------------
3999 Total net position.............. 115 204
------------ -------------- ------------ -------------
4999 Total liabilities and net position 3,228 4,196
-----------------------------------------------------------------------------------------------
Note: Consistent with Government-wide practice for GSEs, information
for 2004 and 2005 was not required to be collected.