[Appendix]
[Other Materials]
[Financing Vehicles and the Board of Governors of the Federal Reserve]
[From the U.S. Government Publishing Office, www.gpo.gov]
<h1>FINANCING VEHICLES AND THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE</h1>
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 System
(Board). The Financing Corporation functions as a financing vehicle for the Federal Savings and Loan Insurance Corporation
(FSLIC) Resolution Fund. 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'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, which is included here for information. Its budget is not subject to review
by the President and is executed and presented here on a calendar-year basis. The previous year's data reflects the final
budget, as approved by the Board.
The 2018 balance sheets for the Financing Corporation and Resolution Funding Corporation are as of December 31, 2018, and
the 2019 balance sheets are as of September 30, 2019.
Federal Funds
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 is to function as a financing vehicle for the FSLIC Resolution Fund, formerly the Federal Savings and Loan Insurance
Corporation. 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 FICO's borrowing authority. FICO paid off its last long-term debt obligation on September
26, 2019, and on October 2, 2019, commenced the process of dissolution in accordance with relevant statutory requirements
and the terms of a plan of dissolution approved by the Director of the Federal Housing Finance Agency (FHFA) on November 30,
2018.
The Act provided formulas pursuant to which the Federal Home Loan Banks (FHLBanks) made capital contributions to FICO. 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 were the primary
source of repayment of the principal of FICO obligations. Securities in the segregated account were kept separate from other
FICO accounts and funds, but were not specifically pledged as collateral for the payment of obligations. The primary source
of payment of interest on the obligations was the receipt of assessments imposed on and collected from institutions' accounts,
which are insured by the Federal Deposit Insurance Corporation's Deposit Insurance Fund.
Subject to the satisfaction of any claims and the payment of other administrative expenses upon FICO's dissolution, which
is expected to occur in the first half of 2020, any surplus and remaining cash on hand of FICO is expected to be distributed
to the FHLBanks, as FICO's sole stockholders, in proportion to their ownership in FICO's nonvoting capital stock. The receipt
by the FHLBanks of any such distribution from FICO will be treated as a partial return of their prior capital contributions
to FICO and credited to their unrestricted retained earnings. The FHLBanks do not expect any distribution from FICO to materially
affect the FHLBanks' combined financial condition or combined results of operations.
Balance Sheet (in millions of dollars)
Identification code 920–4980–0–4–373
2018 actual
2019 actual
ASSETS:
Federal assets:
Investments in U.S. securities:
1102
Segregated accounts investment, net
2,482
1801
Other Federal assets: Cash, cash equivalents
85
198
1999
Total assets
2,567
198
LIABILITIES:
Non-Federal liabilities:
2202
Interest payable
49
2203
Debt
2,320
2207
Other
36
2
2999
Total liabilities
2,405
2
NET POSITION:
3100
FICO capital stock purchased by FHLBanks
680
680
3300
Cumulative results of operations
7,653
7,686
3300
FSLIC capital certificates
–8,170
–8,170
3999
Total net position
163
196
4999
Total liabilities and net position
2,568
198
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 or FIRREA (P.L. 101–73). 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 composed of the Chief
Executive Officer of the Office of Finance of the Federal Home Loan Banks and two members selected from among the presidents
of the 11 Federal Home Loan Banks (FHLBs). 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 required that FHLBs contribute 20 percent of net earnings annually to assist in the payment of interest on bonds
issued by REFCORP until such time as the total payments are equivalent to a $300 million annual annuity with a final maturity
date of April 15, 2030. The FHLBs fulfilled this obligation on August 5, 2011. Since then, with the exception of funds derived
from the sale of former RTC assets managed by the Federal Deposit Insurance Corporation's Federal Savings and Loan Insurance
Corporation (FSLIC) Resolution Fund, only the U.S. Treasury has paid interest on REFCORP's long-term obligations. For details,
please see the Payment to the Resolution Funding Corporation account in the Department of the Treasury section of the Appendix
volume of the Budget.
Balance Sheet (in millions of dollars)
Identification code 920–4981–0–4–373
2018 actual
2019 actual
ASSETS:
Federal assets:
Investments in U.S. securities:
1102
Principal fund account investment, net
21,809
23,119
1206
Non-Federal assets: Assessments receivable for interest expense
886
888
1999
Total assets
22,695
24,007
LIABILITIES:
Non-Federal liabilities:
2202
Accrued interest payable on long-term obligations
886
888
2203
Debt
30,055
30,053
2999
Total liabilities
30,941
30,941
NET POSITION:
3100
Nonvoting capital stock issued to FHLBanks
2,513
2,513
3300
Cumulative results of operations
19,470
20,782
3300
RTC nonredeemable capital certificates
–31,286
–31,286
3300
Contributed capital - principal fund assessments
1,057
1,057
3999
Total net position
–8,246
–6,934
4999
Total liabilities and net position
22,695
24,007
Board of Governors of the Federal Reserve System
Program and Financing (in millions of dollars)
Identification code 920–4982–0–4–803
2018 actual
2019 est.
2020 est.
Obligations by program activity:
0801
Monetary policy
173
199
199
0802
Public programs
18
22
22
0803
Supervision and regulation
178
190
190
0804
Reserve Bank oversight
36
35
35
0805
Currency operating expenses (Board incurred)
44
50
50
0806
Support and overhead
334
348
348
0809
Reimbursable program activities, subtotal
783
844
844
0810
Office of Inspector General operating expenses
33
35
29
0900
Total new obligations, unexpired accounts
816
879
873
Budgetary resources:
Financing authority:
Spending authority from offsetting collections, mandatory:
1800
Collected
816
879
873
1930
Total budgetary resources available
816
879
873
Change in obligated balance:
Unpaid obligations:
3010
New obligations, unexpired accounts
816
879
873
3020
Outlays (gross)
–816
–879
–873
Financing authority and disbursements, net:
Mandatory:
4090
Budget authority, gross
816
879
873
4110
Outlays, gross (total)
816
879
873
Offsets against gross financing authority and disbursements:
Offsetting collections (collected) from:
4123
Non-Federal sources
–816
–879
–873
4180
Budget authority, net (total)
4190
Outlays, net (total)
The Federal Reserve System operates under the provisions of the Federal Reserve Act of 1913, as amended, and other acts of
the Congress. To carry out its responsibilities under this Act, the Board of Governors (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 Act. The Board's principal duties consist of exerting an influence over credit conditions and supervising
the Federal Reserve banks and member banks.
Under the provisions of section 10 of the Federal Reserve Act, the Board levies upon the Federal Reserve banks, in proportion
to their capital and surplus, an assessment sufficient to pay its estimated expenses. Also under the Act, the Board 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 "not be construed to be Government
funds or appropriated moneys.'' No Government appropriation is required to support operations of the Board.
The Board issues U.S. currency (Federal Reserve notes) and the Reserve Banks distribute currency through depository institutions.
The Board incurs costs and assesses the Reserve Banks for these costs related to producing, issuing, and retiring Federal
Reserve notes, as well as providing other services. The assessment is allocated based on each Reserve Bank's share of the
number of notes comprising the System's net liability for Federal Reserve notes on December 31 of the prior year. The Board
recognizes the assessment in the year in which the associated costs are incurred.
Since 2017, the Board has undertaken a greater role in the currency program, including in research and development and quality
assurance. This expanded role is reflected in the reclassification of certain transactions compared to prior years. The information
presented pertains to Board operations only, which includes these new programs; expenditures for the currency program costs
specific to the work performed by Treasury, including production, issuance and retirement, are not included.
The Dodd-Frank Act (P.L. 111–203), enacted July 21, 2010, directed the Board to collect assessments, fees, or other charges
equal to the total expenses the Board estimates are necessary or appropriate to carry out the supervisory and regulatory responsibilities
of the Board for certain bank holding companies and savings and loan holding companies, as well as nonbank financial companies
designated for Board supervision by the Financial Stability Oversight Council (FSOC). The Board does not recognize the supervision
and regulation assessments as revenue nor does the Board use the collections to fund Board expenses; the funds are transferred
to the Treasury. The Economic Growth, Regulatory Relief, and Consumer Protection Act (EGRRCPA, P.L. 115–174), enacted May
24, 2018, directed the Board to collect these assessments, fees, or other charges on such companies with total consolidated
assets of $100 billion (from $50 billion in the Dodd-Frank Act), as well as to adjust amounts charged to reflect changes in
supervisory and regulatory responsibilities resulting from EGRRCPA on firms with total consolidated assets less than $250
billion.
Object Classification (in millions of dollars)
Identification code 920–4982–0–4–803
2018 actual
2019 est.
2020 est.
Reimbursable obligations:
11.1
Personnel compensation: Full-time permanent
456
483
487
12.1
Civilian personnel benefits
94
97
98
13.0
Benefits for former personnel
16
17
17
21.0
Travel and transportation of persons
16
16
17
22.0
Transportation of things
21
23
19
23.2
Rental payments to others
37
37
34
23.3
Communications, utilities, and miscellaneous charges
8
8
8
24.0
Printing and reproduction
1
1
25.1
Advisory and assistance services
80
107
107
25.2
Other services from non-Federal sources
55
54
49
25.4
Operation and maintenance of facilities
3
3
3
25.7
Operation and maintenance of equipment
4
5
5
26.0
Supplies and materials
1
1
1
31.0
Equipment
25
27
27
99.9
Total new obligations, unexpired accounts
816
879
873