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Dallas, Texas, October 14, 1957

To all Banking Institutions and Others Concerned
in the Eleventh Federal Reserve District:

Enclosed is the text of a press statement, dated October 15, 1957, by
the Federal National Mortgage Association, concerning a forthcoming pub­
lic cash offering of $750,000,000, or thereabouts, of its Series ML notes.
Enclosed also is a general prospectus prepared by the Association contain­
ing additional data relating to the offering and providing information
regarding FNMA background and operations, capitalization, borrowing
authority, etc.
As indicated in the press statement, the FNMA offering will be made
by the Treasury Department on October 21, 1957, through the facilities
of the Federal Reserve banks as fiscal agents of the United States. The
Treasury’s announcement and subscription forms will be mailed out prior
to that date.
Yours very truly,
Watrous H. Irons

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (


Tuesday, October 15, 1957


The Federal National Mortgage Association has entered into an agreement with the Treasury Depart­
ment to handle a public cash offering of $750 million or thereabouts, of its Series ML (Management and
Liquidating) Notes it was announced today by FNMA President J. Stanley Baughman.
Proceeds of the sale of the Series ML Notes will be used to reduce the indebtedness of the Association
to the U. S. Treasury.
The FNMA offering will be made by the Treasury Department on October 21 through the facilities of
the Federal Reserve Banks as fiscal agents of the United States. The channels and procedures to be followed
in marketing the notes are virtually the same as those used by the Treasury Department in offering public
debt securities.
The notes will be short-term with a maturity of approximately 8 months. The maturity date and interest
rate of the issue will be stated in an announcement of the offering to be made by the Treasury Department
October 17. Subscription books for the FNMA offering will be open only on Monday, October 21. Payment
is scheduled for October 29.
The FNMA ML Notes are not guaranteed by the United States. FNMA has received assurance from
the Treasury Department that it will make loans to FNMA if needed to provide for interest payments and
payment of principal at maturity of the ML Notes. After this financing the outstanding ML Notes will
continue to be less than 80 percent of the assets as described in the prospectus. In connection with this, Mr.
Baughman pointed out that “ FNMA’s Management and Liquidating Functions have an excellent earning
record with a net income of $105 million shown for the past three fiscal years based on a net profit of
$35 million for each of fiscal years 1955, 1956 and 1957.”
In his announcement Mr. Baughman said that ‘ ‘ one of the favorable features of this issue is the arrange­
ment FNMA has made with the Treasury Department that will enable qualified subscribing banks to
obtain credits to their Treasury Tax and Loan Accounts in amounts equal to notes allotted and paid for,
by following the procedure to be prescribed in the forthcoming Treasury circular announcing the offering.
The notes may be pledged as collateral to Treasury Tax and Loan Accounts.”
The FNMA notes are lawful investments and may be used as security for all fiduciary, trust and
public funds, the investment or deposit of which is under the authority and control of the United States
or any officer or officers thereof. The FNMA Charter Act makes no provisions for specific exemption of
these notes from Federal, state, municipal, or local taxation.
Mr. Baughman also declared that ‘ ‘ these notes may be purchased by and held without limit by national
banks since the law exempts obligations of FNMA from restrictions and limitations generally applicable
to investment securities.”

Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102