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



[[Page 1227]]


 
  FINANCING VEHICLES AND THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE

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

    --The Financing Corporation functions as a financing vehicle for the 
        Federal Savings and Loan Insurance Corporation (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 (Act). FICO's sole purpose is to function as a 
financing vehicle for FSLIC Resolution Fund, formerly the Federal 
Savings and Loan Insurance Corporation. FICO operates under the 
supervision and control of the Federal Housing Finance Board (Financing 
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 FSLIC Resolution Fund, or to refund any 
previously issued obligations. The Resolution Trust Corporation 
Refinancing, Restructuring, and Improvement Act of 1991 terminated 
FICO's borrowing authority.
    The Act provided formulas pursuant to which the Federal Home Loan 
Banks make 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 are the primary source of repayment of the principal of 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 and the Savings Association Insurance Fund.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4033-0-3-373

2004 actual

2005 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102

Segregated accounts investment, net

2,736

2,916

1206

Receivables, net

92



1801

Cash, cash equivalents

65

283

1901

Other assets

13

13





1999

Total assets

2,906

3,212

    LIABILITIES:
2202

Interest payable

157

236

2203

Debt

8,141

8,141

2207

Other

42

89





2999

Total liabilities

8,340

8,466

    NET POSITION:
3100

FICO capital stock purchased by FHLBanks

680

680

3300

Cumulative results of operations

2,056

2,236

3300

FSLIC capital certificates

-8,170

-8,170





3999

Total net position

-5,434

-5,254





4999

Total liabilities and net position

2,906

3,212

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                     Resolution Funding Corporation

    The Resolution Funding Corporation (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 (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 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 (FHLBanks). Members of 
the Directorate serve without compensation, and REFCORP is not permitted 
to have any paid employees.
    FIRREA, as amended, 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 are held in the Principal Fund and are the 
primary source of repayment of the principal of the obligations at 
maturity.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4029-0-3-373

2004 actual

2005 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102

Principal fund account investment, net

7,327

7,766

1206

Assessments receivable for interest expense

886

888





1999

Total assets

8,213

8,654

[[Page 1228]]

    LIABILITIES:
2202

Accrued interest payable on long-term obligations

886

888

2203

Debt

30,079

30,078





2999

Total liabilities

30,965

30,966

    NET POSITION:
3100

Nonvoting capital stock issued to FHLBanks

2,513

2,513

3300

Cumulative results of operations

4,965

5,405

3300

RTC nonredeemable capital certificates

-31,286

-31,286

3300

Contributed capital--principal fund assessments

1,056

1,056





3999

Total net position

-22,752

-22,312





4999

Total liabilities and net position

8,213

8,654

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            BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

               Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4450-0-3-803      2005 actual   2006 est.   2007 est.
----------------------------------------------------------------------------

    Obligations by program activity:
09.01 Monetary and economic policy......         108         115         120
09.02 Services to financial institutions 
        and the public..................           5           5           6
09.03 Supervision and regulation of 
        financial institutions..........         113         121         125
09.04 System policy direction and 
        oversight.......................          45          48          50
                                           ---------   ---------  ----------
09.09   Subtotal: Board operating 
          expenses......................         271         289         301
09.10 Office of Inspector General 
        operating expenses..............           4           4           4
                                           ---------   ---------  ----------
10.00   Total new obligations...........         275         293         305
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    Budgetary resources available for obligation:
22.00 New budget authority (gross)......         275         293         305
23.95 Total new obligations.............        -275        -293        -305
----------------------------------------------------------------------------

    New budget authority (gross), detail:
      Mandatory:

69.00   Spending authority from 
          offsetting collections 
          (gross): Offsetting 
          collections (cash)............         275         293         305
----------------------------------------------------------------------------

    Change in obligated balances:
72.40 Obligated balance, start of year..          26          26          26
73.10 Total new obligations.............         275         293         305
73.20 Total outlays (gross).............        -275        -293        -305
                                           ---------   ---------  ----------
74.40   Obligated balance, end of year..          26          26          26
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    Outlays (gross), detail:
86.97 Outlays from new mandatory 
        authority.......................         275         293         305
----------------------------------------------------------------------------

    Offsets:
      Against gross budget authority and outlays:

88.40   Offsetting collections (cash) 
          from: Non-Federal sources.....        -275        -293        -305
----------------------------------------------------------------------------

    Net budget authority and outlays:
89.00 Budget authority..................
90.00 Outlays...........................
---------------------------------------------------------------------------
    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 the Congress.
    Program.--To carry out its responsibilities under this 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 this 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 this 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)

----------------------------------------------------------------------------
Identification code 99-4450-0-3-803      2005 actual   2006 est.   2007 est.
----------------------------------------------------------------------------

      Personnel compensation:

11.1    Full-time permanent.............         159         163         178
11.3    Other than full-time permanent..           3           3           3
11.5    Other personnel compensation....           2           2           3
                                           ---------   ---------  ----------
11.9      Total personnel compensation..         164         168         184
12.1  Civilian personnel benefits.......          31          28          33
21.0  Travel and transportation of 
        persons.........................           6           6           6
22.0  Transportation of things..........           1           1           1
23.3  Communications, utilities, and 
        miscellaneous charges...........           9           9          10
24.0  Printing and reproduction.........           2           2           2
25.1  Advisory and assistance services..           4           4           4
25.2  Other services....................          31          33          34
25.2  Other services....................           4           4           4
26.0  Supplies and materials............           8          11          10
31.0  Equipment.........................          15          27          17
                                           ---------   ---------  ----------
99.0      Reimbursable obligations......         275         293         305
                                           ---------   ---------  ----------
99.9    Total new obligations...........         275         293         305
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