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GOVERNMENT-SPONSORED ENTERPRISES This chapter contains descriptions of and data on the Government-sponsored enterprises listed below. These enterprises were established and chartered by the Federal Government. They are not included in the Federal budget because they are classified as being private. However, because of their relationship to the Government, detailed statements of financial operations and 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 College Construction Loan Insurance Association is organized as a private, for-profit insurance corporation to guarantee and insure bonds and loans made for construction and renovation of college and university facilities. The Corporation was established by, but was not chartered by, the Federal Government. —The Federal National Mortgage Association provides supplementary assistance to the secondary market for home mortgages. The Federal Home Loan Mortgage Corporation provides a secondary market for mortgage lenders. Both are supervised by the Department of Housing and Urban Development for their roles in helping to finance low- and moderate-income housing; both are regulated for financial safety and soundness by the Office of Federal Housing Enterprise Oversight. —The Banks for Cooperatives, 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 certain rural housing loans as well as for farm and business loans guaranteed by the U.S. Department of Agriculture. —The Federal Home Loan Banks assist thrift institutions, banks, insurance companies, and credit unions in providing financing for housing and community development and are supervised by the Federal Housing Finance Board. —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 provides financing for the Resolution Trust Corporation (RTC) and is subject to the general oversight and direction of the Thrift Depositor Protection Oversight Board. The Board of Governors of the Federal Reserve System is not a Government-sponsored enterprise, but its transactions also 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. DEPARTMENT OF EDUCATION STUDENT LOAN MARKETING ASSOCIATION Program and Financing (in millions of dollars) Identification code 99–1500–0–3–502 1996 actual 1997 est. 1998 est. Obligations by program activity: Operating expenses: 00.01 Interest expense ........................................................ 00.02 Administrative expenses and taxes .......................... 2,690 510 2,555 466 2,683 489 00.91 Total operating expenses ...................................... Capital investment: Loans, etc .................................................................. Investments, dividends, and other assets ................ 3,200 3,021 3,172 9,984 845 9,845 700 9,190 650 01.91 Total capital investment ....................................... 10,829 10,545 9,840 10.00 Total obligations ........................................................ 14,029 13,566 13,012 22.00 23.95 Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. 14,029 –14,029 13,566 –13,566 13,012 –13,012 –6,707 –1,434 –1,488 20,736 15,000 14,500 Total new budget authority (gross) .......................... 14,029 13,566 13,012 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: U.S. Securities: Par value ......................................... 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.91 Unpaid obligations, end of year: Obligated balance: U.S. Securities: Par value ......................................... 1,201 14,029 –13,940 1,291 13,566 –13,604 1,253 13,012 –12,950 1,291 1,253 1,315 Outlays (gross), detail: Outlays from new permanent authority ......................... 13,940 13,604 12,950 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –20,736 –15,000 –14,500 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... –6,707 –6,796 –1,434 –1,396 –1,488 –1,550 01.01 01.02 67.15 68.00 70.00 New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 72.91 86.97 89.00 90.00 Status of Direct Loans (in millions of dollars) Identification code 99–1500–0–3–502 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 9,984 9,845 9,190 1150 Total direct loan obligations ..................................... Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: 1251 Repayments and prepayments .................................. 1252 Proceeds from loan asset sales to the public or discounted ............................................................. 1264 Write-offs for default: Other adjustments, net ............. 1210 1231 9,984 9,845 9,190 41,636 9,984 37,391 9,845 35,572 9,190 –9,713 –5,670 –5,237 –4,522 6 –6,000 6 –6,000 7 1155 1156 THE BUDGET FOR FISCAL YEAR 1998 DEPARTMENT OF EDUCATION—Continued STUDENT LOAN MARKETING ASSOCIATION—Continued Status of Direct Loans (in millions of dollars)—Continued 1996 actual Identification code 99–1500–0–3–502 1290 Outstanding, end of year .......................................... 37,391 1997 est. 35,572 1998 est. 33,532 The Student Loan Marketing Association (Sallie Mae), a shareholder-owned corporation, was created 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 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. In capital shortage areas, Sallie Mae is authorized, at the request of Federal officials, to make insured loans directly to students. Sallie Mae is authorized to advance funds to State agencies that will provide loans to students. Sallie Mae 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. Sallie Mae 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. 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] 1996 actual 1997 est. 1998 est. Guaranteed student loans: Stafford (formerly ‘‘regular’’): Purchased ........................................................................... Warehoused ........................................................................ PLUS/SLS: Purchased .............................................................. 5,956 1,721 682 6,620 1,000 758 6,124 1,000 701 Subtotal, Guaranteed student loans ............................. Health professions loans: Purchased .......................................... Other ............................................................................................ 8,359 366 1,259 8,378 407 1,060 7,825 376 989 Total ............................................................................... 9,984 9,845 9,190 Financing.—Between 1974 and early 1982, Sallie Mae borrowed through the Federal Financing Bank. The Secretary of Education was authorized by the Education Amendments of 1980 to guarantee principal and interest on such obligations issued prior to October 1, 1985. Under an agreement with the Department of the Treasury reached in early 1981, Sallie Mae began borrowing directly in the private capital markets. Its last borrowing through the FFB and its last issuance of federally guaranteed obligations occurred in January 1982. During the first quarter of 1994, Sallie Mae prepaid all of the outstanding FFB debt. Its obligations today have certain characteristics, provided by charter, which give them ‘‘agency’’ status, but they are not federally insured or guaranteed. Management.—At its annual meeting in May 1996, the shareholders of Sallie Mae elected 14 members to its board of directors to serve until the next annual meeting. Sallie Mae is entitled to elect 14 members to the board. Pursuant to the Education Amendments of 1972, seven public directors are appointed by the President, who also names the chairman from among the 21 members. Restructuring.—On September 30, 1996, the President signed legislation that authorizes Sallie Mae to restructure as a fully private, state chartered corporation. The legislation calls for Sallie Mae’s shareholders to vote on restructuring within 18 months of enactment of this authorizing legislation. Under the restructuring, currently outstanding Sallie Mae debt will retain the characteristics of government sponsored enterprise (GSE) debt, as will debt issued by the GSE subsidiary of the new private company during a wind down period that ends in 2008. New business activities conducted outside of the GSE will not be financed by GSE debt. If the shareholders vote not to authorize the restructuring, Sallie Mae is required to submit a plan by July 1, 2007, for winding up its GSE activities by July 1, 2013, on which day Sallie Mae would cease to exist. Statement of Operations (in millions of dollars) Identification code 99–1500–0–3–502 1995 actual 1996 actual 1997 est. 1998 est. 0101 0102 Revenue ................................................... Expense .................................................... 3,959 –3,481 .................. .................. .................. .................. .................. .................. 0109 Net income .............................................. 478 .................. .................. .................. Note.—The Sallie Mae Board of Directors does not consider it appropriate to forecast corporate revenue in a public document since such forecasts could be used for speculative purposes. Balance Sheet (in millions of dollars) Identification code 99–1500–0–3–502 ASSETS: Federal assets: Investments in US securities: 1102 Treasury securities, par .................. 1104 Agency securities, par .................... 1106 Receivables, net ............................. Non-Federal assets: 1201 Investments in non-Federal securities, net .................................................. 1206 Receivables, net .................................. 1207 Advances and prepayments ................ Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 1801 1803 1901 Value of assets related to direct loans .......................................... Other Federal assets: Cash and other monetary assets ....... Property, plant and equipment, net Other assets ........................................ 1999 1995 actual 1996 actual 1997 est. 1998 est. 1,173 29 855 1,281 10 852 1,243 10 894 1,305 10 939 9,907 326 13 6,971 483 15 7,345 507 15 7,682 532 16 41,739 37,538 35,712 33,664 –103 –147 –140 –132 41,636 37,391 35,572 33,532 37 179 144 35 246 100 37 259 105 39 272 110 Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Interest payable .................................. 2203 Debt ..................................................... 2206 Pension and other actuarial liabilities 2207 Other ................................................... 54,299 47,384 45,987 44,437 582 51,672 14 746 472 44,964 15 916 495 43,448 15 961 520 41,771 16 1,009 2999 53,014 46,367 44,919 43,316 1,284 1,017 1,068 1,121 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 3999 Total net position ................................ 1,284 1,017 1,068 1,121 4999 Total liabilities and net position ............ 54,298 47,384 45,987 44,437 Object Classification (in millions of dollars) Identification code 99–1500–0–3–502 11.1 12.1 21.0 23.3 Personnel compensation: Full-time permanent ............. Civilian personnel benefits ............................................ Travel and transportation of persons ............................ Communications, utilities, and miscellaneous charges 1996 actual 53 14 5 4 1997 est. 45 11 4 4 1998 est. 47 12 4 4 GOVERNMENT-SPONSORED ENTERPRISES f DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 25.1 25.2 31.0 33.0 43.0 Advisory and assistance services .................................. Other services ................................................................ Equipment ...................................................................... Loans .............................................................................. Interest, dividends, and taxes ....................................... 15 234 8 9,984 3,712 13 197 6 9,845 3,441 13 207 7 9,190 3,528 99.9 Total obligations ........................................................ 14,029 13,566 13,012 COLLEGE CONSTRUCTION LOAN INSURANCE ASSOCIATION The College Construction Loan Insurance Association (Connie Lee) was authorized by Public Law 99–498 on October 17, 1986. The Corporation was created to insure and reinsure bonds and loans of educational institutions which borrow funds to finance the acquisition, construction, or renovation of their facilities. The Association was incorporated in February 1987, under the District of Columbia Business Corporation Act. Connie Lee’s authorizing statute stated that ‘‘no obligation which is insured, guaranteed, or otherwise backed by the corporation, shall be deemed to be an obligation which is guaranteed by the full faith and credit of the United States.’’ Operations.—Connie Lee is structured to operate as a private corporation, subject to the same state laws and regulations as any other insurance company. Accordingly, Connie Lee secures insurance licenses in each of the various states in which it expects to conduct its insurance activities. The Board of Directors authorized management to begin activities as a reinsuror of educational facilities bonds in 1988. Connie Lee reinsured its first bonds in December 1988. In fiscal year 1996, Connie Lee insured $2,041 million of debt service on bonds benefitting colleges, universities and teaching hospitals. Connie Lee also provided reinsurance on bonds representing $5 million of debt service. INSURANCE AND REINSURANCE ACTIVITY [In thousands of dollars] 1157 Privatization.—Legislation was enacted in 1996 that privatizes Connie Lee by repealing its enabling legislation and requiring the Federal Government to sell, and Connie Lee to purchase, the corporation’s federally owned stock. This sale will occur during fiscal year 1997, and proceeds will be used to finance public elementary and secondary school facility construction and repair within the District of Columbia. Data on the corporation’s financial position at the time of the stock sale will be published in the President’s Budget for FY 1999. The corporation will continue to insure debt of educational institutions, including Historically Black Colleges and Universities and academic institutions that have lower investmentgrade credit ratings. Without the Federal restrictions previously imposed by legislation, the corporation will be able to guarantee bonds in other market sectors and diversify into new products and services. Balance Sheet (in millions of dollars) Identification code 99–9931–0–3–502 ASSETS: Federal assets: Investments in US securities: 1102 Treasury securities, par .................. 1104 Agency securities, par .................... Non-Federal assets: 1201 Investments in non-Federal securities, net .................................................. 1206 Receivables, net .................................. 1207 Advances and prepayments ................ Other Federal assets: 1801 Cash and other monetary assets ....... 1803 Property, plant and equipment, net 1999 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 2201 Non-Federal liabilities: Accounts payable 1995 actual 1996 actual 1997 est. 1998 est. 25 30 42 21 .................. .................. .................. .................. 142 8 30 155 9 37 .................. .................. .................. .................. .................. .................. 6 1 3 1 .................. .................. .................. .................. 242 268 .................. .................. 7 80 9 94 .................. .................. .................. .................. f Debt service insured: Direct insurance ................................................................................................................. Reinsurance ....................................................................................................................... 1996 actual Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 87 103 .................. .................. 2,041,502 5,210 155 165 .................. .................. Total .......................................................................................................................... 2,046,712 3999 Total net position ................................ 155 165 .................. .................. Financing.—In order to provide capitalization, the Secretary of Education, the Student Loan Marketing Association (Sallie Mae), and other investors were authorized to purchase stock in the corporation. Sallie Mae made an initial investment of $2 million in Connie Lee stock in fiscal year 1987. The Secretary of Education purchased $19.1 million in Connie Lee stock with funds appropriated for this purpose in fiscal year 1988. Subsequently, the corporation sold an additional $50.9 million of equity securities to Sallie Mae, increasing total capital of the corporation to $72.0 million. At the end of 1991, Connie Lee placed equity securities with private investors, providing sufficient incremental capital to obtain a triple-A credit rating necessary to engage in the financial guaranty business as a direct writer of insurance. 4999 Total liabilities and net position ............ 242 268 .................. .................. Statement of Operations (in millions of dollars) 2999 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT FEDERAL NATIONAL MORTGAGE ASSOCIATION PORTFOLIO PROGRAMS Program and Financing (in millions of dollars) Identification code 99–2500–0–3–371 1996 actual 1997 est. 1998 est. Obligations by program activity: Operating expenses: 00.01 Interest on borrowings from the public .................... 00.02 Other costs ................................................................ 19,659 3,120 22,126 2,855 25,444 3,011 22,779 24,981 28,455 0101 0102 Revenue ................................................... Expense .................................................... 22 –12 22 –11 .................. .................. .................. .................. 01.01 01.02 Total operating expenses ...................................... Capital investment: Mortgage purchases and loans ................................ Lease-Purchase Discounts ........................................ 0109 Net income .............................................. 10 11 .................. .................. 01.91 Total capital investment ....................................... 71,105 67,488 77,724 Management.—Connie Lee is governed by an eleven-member board of directors comprised of two directors appointed by the Secretary of the Treasury; two directors appointed by the Secretary of Education; three directors appointed by the Student Loan Marketing Association; and four directors elected by the corporation’s shareholders, one of whom must be an administrator of a college or university. 10.00 Total obligations ........................................................ 93,884 92,469 106,179 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 406,165 152,358 464,639 112,169 484,339 146,721 23.90 23.95 558,523 –93,884 576,808 –92,469 631,060 –106,179 Identification code 99–9931–0–3–502 1995 actual 1996 actual 1997 est. 1998 est. 00.91 71,234 67,488 77,724 –129 ................... ................... 21.47 Total budgetary resources available for obligation New obligations ............................................................. 1158 THE BUDGET FOR FISCAL YEAR 1998 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued PORTFOLIO PROGRAMS—Continued Program and Financing (in millions of dollars)—Continued Identification code 99–2500–0–3–371 24.47 67.10 67.15 67.90 68.00 Unobligated balance available, end of year: Authority to borrow ................................................................... New budget authority (gross), detail: Authority to borrow ........................................................ Net increase or decrease in unlimited borrowing authorities ..................................................................... 1996 actual 1997 est. 1998 est. 464,639 484,339 524,881 99,682 81,253 115,011 –3 –3 –3 Authority to borrow (total) ......................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 99,679 81,250 115,008 52,679 30,919 31,713 Total new budget authority (gross) .......................... 152,358 112,169 146,721 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: 72.47 Corporate borrowing authority .............................. 72.90 Fund balance ........................................................ –39,959 48,071 –47,738 54,604 –57,179 63,193 72.99 73.10 73.20 8,112 93,884 –95,130 6,866 92,469 –93,322 6,014 106,179 –105,909 74.47 74.90 Total unpaid obligations, start of year ................ New obligations ............................................................. Total outlays (gross) ...................................................... Unpaid obligations, end of year: Obligated balance: Corporate borrowing authority .............................. Fund balance ........................................................ –47,738 54,604 –57,179 63,193 –64,601 70,885 74.99 Total unpaid obligations, end of year .................. 6,866 6,014 6,284 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 52,674 42,456 30,919 62,403 31,710 74,199 87.00 Total outlays (gross) ................................................. 95,130 93,322 105,909 Offsets: Against gross budget authority and outlays: Offsetting collections (cash) from: 88.00 Federal sources ..................................................... 88.40 Non-Federal sources ............................................. –130 –52,549 –130 –30,789 –130 –31,583 88.90 Total, offsetting collections (cash) .................. –52,679 –30,919 –31,713 89.00 90.00 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 99,679 42,451 81,250 62,403 115,008 74,196 70.00 Status of Direct Loans (in millions of dollars) Identification code 99–2500–0–3–371 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 63,858 68,312 78,229 1150 Total direct loan obligations ..................................... 63,858 68,312 78,229 250,374 293,037 330,600 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: 1231 Direct loan disbursements ........................................ 1232 Purchase of loans assets from the public ............... 1251 Repayments: Repayments and prepayments ................. 1264 Write-offs for default: Other adjustments, net ............. 66,802 67,301 77,506 4,432 188 219 –26,596 –29,926 –37,726 –1,975 ................... ................... 1290 293,037 1210 Outstanding, end of year .......................................... 330,600 370,599 The Federal National Mortgage Association, (Fannie Mae) is a federally-chartered, privately-owned company with a public mission to play a leadership role in mortgage finance, to improve the liquidity of the residential mortgage market and increase the availability of mortgage credit to low-and moderate income families and areas underserved by private lending institutions. 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, 1996, Fannie Mae held a net mortgage portfolio totaling $277 billion and had outstanding guaranteed mortgage-backed securities of over $636 billion. Fannie Mae’s portfolio purchases and MBS finance about one of every five mortgages in the country. Through a federal charter, Congress has equipped Fannie Mae with certain attributes to help it carry out its public mission and help lower the cost of homeownership for lowand moderate-income homebuyers. These include an exemption from state and local taxes (except real property taxes), an exemption of its debt and mortgage securities from Securities and Exchange Commission registration requirements, and potential access to U.S. Treasury funds. Fannie Mae’s charter also prohibits the imposition of user fees. Fannie Mae pays federal income tax; its earnings as of third quarter suggest the company will pay over $1 billion for 1996. 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, if 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.’’ Fannie Mae’s primary customers are low-, moderate-, and middle-income families. In March of 1994, the company established its ‘‘$1 Trillion Initiative’’ to provide mortgage financing for low- and moderate-income families in underserved markets. At year-end 1996, the company had provided $269 billion in financing for $3.6 million targeted households, including 660,000 minority families, 1.5 million residents in central cities, and 723,000 first-time homebuyers. In addition, the company opened 25 new Partnership Offices in communities around the country; these offices work with local governments, lenders, nonprofit organizations, and neighborhood leaders to tailor affordable housing programs to each community’s needs. On December 1, 1995, the U.S. Department of Housing and Urban Development issued a final rule that sets the levels of the affordable housing goals for 1996–1999 and es- GOVERNMENT-SPONSORED ENTERPRISES 1159 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued tablishes the requirements for counting mortgage purchases to low- and moderate-income families and families living in underserved areas with specific census tract and minority concentration requirements. Under the new regulations, the low- and moderate-income target for 1996 is 40 percent, increasing to 42 percent for years 1997–1999; the underserved area goal for 1996 is 21 percent, increasing to 24 percent for the 1997–1999 period. In addition, the special affordable housing goal requires the corporation to target 12 percent of its conventional mortgage business in 1996 and 14 percent in 1997–1999 to very low-income families or low-income families in low-income areas; those amounts must include qualifying special affordable purchases on multifamily units totaling not less than $1.29 billion for each year. Fannie Mae exceeded its housing goals for 1994 and 1995, and expects to meet or exceed all of its goals for 1996. The Act also established the Office of Federal Housing Enterprise Oversight (OFHEO), an independent office within HUD, headed by a Director who reports directly to the Congress. OFHEO has statutory responsibility for ensuring that Fannie Mae is adequately capitalized and operating in a safe and sound manner. Included among the express statutory authorities of the Director is the authority to conduct examinations of the financial health of the company and to issue minimum and risk-based capital standards. The minimum capital requirements are computed from statutorily established ratios that are applied to the assets and off-balance sheet risks of Fannie Mae. The risk-based capital standard determines the amount of capital that Fannie Mae must hold to withstand the impact of simultaneous adverse credit and interest rate stresses over a 10-year period, plus an additional amount to cover management and operations risk. Total capital (shareholder’s equity plus allowance for loan losses) at the end of September 1996 was $13.0 billion. The company has continued to remain in compliance with applicable capital standards and has been deemed adequately capitalized by OFHEO since its first classification in June 1993. Fannie Mae has pursued its housing mission vigorously and productively while continuing to maintain its financial strength. It provides liquidity and stability to the mortgage market. It also passes on reduced mortgage interest rates to homebuyers—according to some studies between 25 and 50 basis points. Meanwhile, Fannie Mae has remained profitable. Through the third quarter of 1996, it earned $2.01 billion in net income. The company also completed the financial restructuring plan it announced at the end of 1995, which included stock repurchase plans totaling $1 billion and a $350 million contribution to the Fannie Mae foundation for expanding homeownership. The forecast data contained in this material has been developed based on certain general economic assumptions prevalent in the third quarter of 1996 and should not be construed as an official forecast for Fannie Mae. Income and retained earnings for the years ended September 30, 1995 and 1996 follow (in thousands of dollars): Balance Sheet (in millions of dollars) 1997 est. 1998 est. 650 .................. .................. 22 47,828 21 53,933 .................. 63,209 .................. 70,904 231,960 8,545 267,105 10,164 307,739 3,709 347,980 3,406 –287 –253 –233 –227 240,218 277,016 311,215 351,159 5,763 177 6,725 190 7,472 .................. 8,455 .................. Total assets ........................................ LIABILITIES: Federal liabilities: 2101 Accounts payable ................................ 2102 Accrued interest payable .................... 2105 Other ................................................... Non-Federal liabilities: 2203 Debt ..................................................... 2204 Estimated Federal liability for loan guarantees, credit reform .............. 2206 Pension and other actuarial liabilities 2207 Subtotal, Federal taxes payable ......... 294,229 338,535 381,896 430,518 349 3,712 5 550 4,429 6 .................. 5,499 .................. .................. 6,242 .................. 277,192 319,153 359,996 406,260 2,028 157 65 1,936 178 15 3,411 .................. .................. 3,694 .................. .................. 2999 283,508 326,267 368,906 416,196 10,721 12,267 12,990 14,322 Identification code 99–2500–0–3–371 ASSETS: Federal assets: 1101 Fund balances with Treasury ............. Investments in US securities: 1102 Treasury securities, par .................. 1104 Other ............................................... Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Public: direct loans (net of discount) 1602 Federal Agencies ................................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 1801 1803 Value of assets related to direct loans .......................................... Other Federal assets: Cash and other monetary assets ....... Property, plant and equipment, net 1999 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 1995 actual 1996 actual 221 3999 Total net position ................................ 10,721 12,267 12,990 14,322 4999 Total liabilities and net position ............ 294,229 338,534 381,896 430,518 Object Classification (in millions of dollars) 1996 actual Identification code 99–2500–0–3–371 21.0 23.3 24.0 25.1 25.2 26.0 31.0 33.0 43.0 Travel and transportation of persons ............................ Communications, utilities, and miscellaneous charges Printing and reproduction .............................................. Advisory and assistance services .................................. Other services: Other services—Non-Federal employment compensation .............................................................. Other services ............................................................ Supplies and materials ................................................. Equipment ...................................................................... Investments and loans .................................................. Interest and dividends ................................................... 99.9 Total obligations ........................................................ 25.2 f 1997 est. 1998 est. 14 14 15 11 11 12 5 ................... ................... 95 89 97 310 354 388 1,785 1,454 1,462 4 ................... ................... 71 71 77 71,105 67,487 77,724 20,484 22,989 26,404 93,884 92,469 106,179 MORTGAGE-BACKED SECURITIES Program and Financing (in millions of dollars) Identification code 99–2501–0–3–371 1996 actual 1997 est. 1998 est. 1995 actual 1996 actual 00.01 Obligations by program activity: Capital investment: Commitments to issue MBS ......... 200,735 128,618 141,293 Gross revenue ................................................................................................ Gross expenses .............................................................................................. 21,408,700 18,190,200 24,404,500 21,008,700 10.00 Total obligations (object class 33.0) ........................ 200,735 128,618 141,293 Income before Federal income tax ....................................................... Federal income tax ........................................................................................ 3,218,500 930,100 3,395,800 1,000,300 22.00 23.95 Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. 200,735 –200,735 128,618 –128,618 141,293 –141,293 Net income ............................................................................................ Retained earnings, beginning of year ........................................................... Dividends on common stock .......................................................................... 2,288,400 7,545,000 ¥710,400 2,395,500 9,123,000 ¥800,200 67.15 68.00 117,682 59,205 66,453 83,053 69,413 74,840 Retained earnings, end of year ............................................................ 9,123,000 10,718,300 200,735 128,618 141,293 70.00 New budget authority (gross), detail: Corporate borrowing authority ....................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. Total new budget authority (gross) .......................... 1160 THE BUDGET FOR FISCAL YEAR 1998 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued 1603 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued MORTGAGE-BACKED SECURITIES—Continued 1699 Program and Financing (in millions of dollars)—Continued 1996 actual Identification code 99–2501–0–3–371 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Corporate borrowing authority ................................... 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.47 Unpaid obligations, end of year: Obligated balance: Corporate borrowing authority ................................... 87.00 Total outlays (gross) ................................................. f Value of assets related to direct loans .......................................... –521 –541 –563 559,585 636,362 695,556 762,019 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 559,585 636,362 695,556 762,019 559,585 636,362 695,557 762,019 2999 559,585 636,362 695,557 762,019 1999 1998 est. 114,618 200,735 –159,830 155,523 128,618 –128,618 155,523 141,293 –141,293 155,523 155,523 155,523 83,053 76,777 69,413 59,205 74,840 66,453 159,830 128,618 141,293 Identification code 99–4420–0–3–371 Obligations by program activity: Operating expenses: 00.01 Interest expense and provision for loan loss ........... 00.02 Administration ........................................................... Total liabilities .................................... FEDERAL HOME LOAN MORTGAGE CORPORATION PORTFOLIO PROGRAMS Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –83,053 –69,413 –74,840 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 117,682 76,777 59,205 59,205 66,453 66,453 89.00 90.00 –522 1997 est. 72.47 Outlays (gross), detail: 86.97 Outlays from new permanent authority ......................... 86.98 Outlays from permanent balances ................................ Allowance for estimated uncollectible loans and interest (–) .................... Status of Direct Loans (in millions of dollars) Program and Financing (in millions of dollars) 1996 actual 1997 est. 1998 est. 8,960 425 11,979 463 16,015 504 00.91 01.01 Total operating expenses ...................................... Capital investment: Mortgage purchases for portfolio 9,385 46,267 12,442 57,253 16,519 70,848 10.00 Total obligations ........................................................ 55,652 69,695 87,367 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 22.60 Redemption of debt ....................................................... 21,989 66,427 –8,949 23,815 91,234 –19,561 25,793 132,266 –42,757 79,467 –55,652 95,488 –69,695 115,302 –87,367 23,815 25,793 27,935 43,200 61,039 93,013 23,227 30,195 39,253 Total new budget authority (gross) .......................... 66,427 91,234 132,266 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Authority to borrow .................................................... 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.47 Unpaid obligations, end of year: Obligated balance: Authority to borrow .................................................... 7,993 55,652 –63,097 548 69,695 –69,103 1,140 87,367 –87,415 548 1,140 1,092 21.47 1996 actual Identification code 99–2501–0–3–371 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 200,735 128,618 141,293 1150 23.90 23.95 24.47 Total direct loan obligations ..................................... 200,735 128,618 141,293 Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 1231 Disbursements: Direct loan disbursements ................... 1251 Repayments: Repayments and prepayments ................. 559,585 159,830 –83,053 636,362 128,618 –69,413 695,567 141,293 –74,840 67.15 68.00 1290 636,362 695,567 762,020 70.00 Outstanding, end of year .......................................... According to accounting practices for private corporations, the mortgages in the pools of loans supporting the mortgagebacked 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. The forecast data contained in this material has been developed based on certain general economic assumptions prevalent in the third quarter of 1996 and should not be construed as an official forecast of the Corporation’s position. Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... New budget authority (gross), detail: Net change in borrowing authorities ............................. Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 72.47 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 33,115 29,982 44,740 24,363 79,123 8,292 87.00 Total outlays (gross) ................................................. 63,097 69,103 87,415 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –23,227 –30,195 –39,253 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 43,200 39,870 61,039 38,908 93,013 48,162 89.00 90.00 Status of Direct Loans (in millions of dollars) Identification code 99–4420–0–3–371 Balance Sheet (in millions of dollars) Identification code 99–2501–0–3–371 ASSETS: Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1995 actual 560,107 1996 actual 636,883 1997 est. 696,097 1998 est. 762,582 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 46,267 57,253 70,848 1150 Total direct loan obligations ..................................... 46,267 57,253 70,848 1210 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. 94,989 129,427 176,350 GOVERNMENT-SPONSORED ENTERPRISES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued 1231 1251 Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 46,267 –11,829 57,253 –10,330 70,848 –6,913 1290 Outstanding, end of year .......................................... 129,427 176,350 240,285 Federal Home Loan Mortgage Corporation (Freddie Mac), is a federally-charted, private shareholder-owned 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. At the end of 1995, Freddie Mac held a net mortgage portfolio totaling over $107 billion and had outstanding guaranteed mortgagebacked securities of just under $460 billion. 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), an exemption for their debt and mortgage securities from SEC filing registration requirements, and a potential access to U.S. Treasury funds. Freddie Mac does pay federal income tax, however, and securities guaranteed by Freddie Mac and debt issued by the company are not explicitly 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 and Pacific stock exchanges. 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 served as a conduit facilitating the flow of investment dollars from the capital markets to mortgage lenders, and ultimately, to homebuyers, increasing the amount of mortgage credit available and making it more affordable. 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. Thirteen board members are elected annually by shareholders and five are annually appointed by the President of the United States. In addition, FIRREA converted Freddie Mac’s 60 million shares of nonvoting, senior participating preferred stock into voting common stock. As a result, the corporation was taken off the federal budget. FIRREA also clarified Freddie Mac’s role in the housing finance delivery system through amendments to its charter act. Specifically, FIRREA established Freddie Mac’s public mission: ‘‘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.’’ The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (‘‘The Act’’) added to Freddie Mac’s public mission by introducing new affordable housing goals 1161 that are designed to improve the flow of mortgage funds to low- and moderate-income families in central cities, rural areas, and other underserved areas. On December 1, 1995, the U.S. Department of Housing and Urban Development (HUD) issued a final rule that sets the levels of the goals for 1996–1999 and establishes the requirements for counting mortgage purchases for meeting these goals. During the transition period prior to the issuance of the final regulation, Freddie Mac was subject to interim affordable housing goals. These interim goals required Freddie Mac to have 30 percent of the units it finances serve low- and moderate-income families and 30 percent of the units it finances in central cities. In 1995, Freddie Mac purchased about 39 percent of its financings from low- and moderate-income families and 23 percent of its business was located in central cities. Under the interim goals, Freddie Mae also was required to dedicate $3.357 billion in financings for households with very low incomes or with low incomes living in low-income areas. Freddie Mac achieved this goal with $5.426 billion of such loans in 1995. The Act also enhanced the regulatory oversight of Freddie Mac by establishing the Office of Federal Housing Enterprise Oversight (OFHEO), an independent office within HUD, headed by a Director who reports directly to the Congress. OFHEO is responsible for ensuring that Freddie Mac is adequately capitalized and operating in a safe and sound manner. Included among the express statutory authorities of the Director is the authority to conduct examinations of the financial health of the company and to issue minimum and risk-based capital standards. The minimum capital requirements are computed from statutorily established ratios that are applied to the assets and off-balance sheet risks of Freddie Mac. The risk-based capital standard determines the amount of capital that Freddie Mac must hold to withstand the impact of simultaneous adverse credit and interest rate stresses over a 10year period, plus an additional amount to cover management and operations risk. Meanwhile, Freddie Mac has remained profitable. Freddie Mac recorded net income of $1.09 billion in 1995, an 11 percent increase over 1994 earnings of $983 million. Most of Freddie’s increased earnings in 1995 came from a $284 million increase in net interest income as Freddie’s retained portfolio surged by almost 50 percent during the year to pass the $100 billion mark in the fourth quarter. While accepting and managing higher interest rate risk, Freddie Mac has expanded its investments in retained mortgages from only $34 billion in 1992 to $107 billion at the end of 1995 in an effort to generate higher overall returns. The financial data contained in this material relating to future periods represent estimates that have been prepared specifically for inclusion in the President’s budget. These data should not be viewed as an official forecast 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. According to generally accepted accounting principles utilized by private corporations, the mortgages in the pools of loans supporting PCs are considered to be owned by the holder of these securities. Therefore, Freddie Mac does not show these mortgages as assets. However, the budget philosophy of the United States Government includes these mortgages and mortgages pass-through securities as assets and liabilities, respectively, of Freddie Mac. For the purpose of this document, therefore, they are presented as assets and liabilities in the accompanying schedules. On the Status of Direct Loans schedule for mortgage pass-through securities, the 1162 THE BUDGET FOR FISCAL YEAR 1998 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued FEDERAL HOME LOAN MORTGAGE CORPORATION—Continued Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. PORTFOLIO PROGRAMS—Continued 22.00 23.95 items labeled ‘‘Disbursements’’ and ‘‘Repayments’’ are budgetary terms. However, from Freddie Mac’s perspective, these amounts represent ‘‘Sales of PCs’’ and ‘‘Amounts passed through to PC holders,’’ respectively. 67.15 68.00 New budget authority (gross), detail: Corporate borrowing authority (net PC pool change) Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 70.00 Total new budget authority (gross) .......................... 73.10 73.20 86.97 Statement of Operations (in millions of dollars) Identification code 99–4420–0–3–371 1995 actual 1996 actual 1997 est. 1998 est. 0101 0102 Revenue ................................................... Expense .................................................... 8,623 –7,571 11,139 –9,926 .................. .................. .................. .................. 0109 Net income .............................................. 1,052 1,213 .................. .................. Balance Sheet (in millions of dollars) Identification code 99–4420–0–3–371 ASSETS: 1101 Federal assets: Fund balances with Treasury ............................................... Non-Federal assets: 1201 Investments in non-Federal securities, net .................................................. 1206 Receivables, net .................................. 1207 Advances and prepayments ................ Other Federal assets: 1801 Cash and other monetary assets ....... 1802 Inventories and related properties ..... 1803 Property, plant and equipment, net 1999 Total assets ........................................ LIABILITIES: 2101 Federal liabilities: Accounts payable ...... Non-Federal liabilities: 2201 Accounts payable ................................ 2202 Interest payable .................................. 2203 Debt ..................................................... 2206 Pension and other actuarial liabilities Other: 2207 Accrued payroll and benefits ......... 2207 Accrued annual leave (funded or unfunded) ................................... 2999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1997 est. 1998 est. 123,808 –123,808 127,522 –127,522 131,348 –131,348 14,264 14,709 15,168 109,544 112,813 116,180 123,808 127,522 131,348 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 123,808 –123,808 127,522 –127,522 131,348 –131,348 Outlays (gross), detail: Outlays from new permanent authority ......................... 123,808 127,522 131,348 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –109,544 –112,813 –116,180 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 14,264 14,264 14,709 14,709 15,168 15,168 1995 actual 1996 actual 2,820 2,689 2,564 2,445 2,150 3,680 .................. 3,158 8,801 583 4,639 12,193 528 6,815 12,497 478 23,916 94,989 1,098 17,420 129,427 906 12,688 176,350 725 9,241 240,285 539 128,653 162,984 209,687 272,300 73 1 .................. .................. 1150 Total direct loan obligations ..................................... 123,808 127,522 131,348 452 1,090 111,610 .................. 764 1,492 146,954 7,233 1,291 2,042 193,491 5,395 2,182 2,795 254,765 4,024 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 457,046 123,808 –109,544 471,310 127,522 –112,813 486,019 131,348 –116,180 9,725 38 58 89 1290 Outstanding, end of year .......................................... 471,310 486,019 501,187 89.00 90.00 Status of Direct Loans (in millions of dollars) .................. 2 2 2 122,950 156,484 202,279 263,857 5,703 6,500 7,408 8,443 3999 Total net position ................................ 5,703 6,500 7,408 8,443 4999 Total liabilities and net position ............ 128,653 162,984 209,687 272,300 Object Classification (in millions of dollars) 1996 actual Identification code 99–4420–0–3–371 1997 est. 1998 est. 9 32 3 9 32 3 9 32 3 25.2 26.0 33.0 43.0 Travel and transportation of persons ............................ Communications, utilities, and other rent .................... Printing and reproduction .............................................. Other services: Other services—Non-Federal employment compensation .............................................................. Other services ............................................................ Supplies and materials ................................................. Mortgage purchases for portfolio .................................. Interest and provision for loan losses .......................... 257 112 12 46,267 8,960 270 137 12 57,253 11,979 281 167 12 70,848 16,015 99.9 Total obligations ........................................................ 55,652 69,695 87,367 25.2 f MORTGAGE-BACKED SECURITIES Program and Financing (in millions of dollars) Identification code 99–4440–0–3–371 00.01 10.00 1996 actual 1997 est. 1998 est. Obligations by program activity: Capital investment: Issue (sales) of participation certification .................................................................... 123,808 127,522 131,348 Total obligations (object class 33.0) ........................ 123,808 127,522 131,348 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 123,808 127,522 131,348 Balance Sheet (in millions of dollars) 1995 actual Identification code 99–4440–0–3–371 1901 ASSETS: Other Federal assets: Underlying Mortgages .................................................. f 1996 actual 1997 est. 1998 est. 457,046 471,310 486,019 501,187 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 457,046 471,310 486,019 501,187 457,046 471,310 486,019 501,187 2999 457,046 471,310 486,019 501,187 1999 21.0 23.3 24.0 1996 actual Identification code 99–4440–0–3–371 Total liabilities .................................... 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) Banks for Cooperatives (BC), (2) Agricultural Credit Bank (ACB), (3) Farm Credit Banks (FCB), and (4) 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 currently financed by assessments of system institutions. System banks finance loans primarily 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 GOVERNMENT-SPONSORED ENTERPRISES 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. Limited Federal assistance is provided to support interest payments on special FCS Financial Assistance Corporation (FAC) debt obligations (see discussion of FAC elsewhere in this document). BANKS FOR COOPERATIVES Program and Financing (in millions of dollars) Identification code 99–4120–0–3–351 Obligations by program activity: Operating expenses: 00.01 Administrative expenses ............................................ 00.02 Interest on borrowings .............................................. 00.03 Insurance premiums .................................................. 00.04 Provision for loan losses ........................................... 00.06 Income tax expense ................................................... 00.07 Other expenses .......................................................... 1996 actual 1997 est. 1998 est. 6 137 3 9 5 9 6 137 3 7 5 10 7 141 3 5 7 9 1290 1996 actual Total interest income .............................. Total interest expense ............................. 177 –127 200 –137 198 –137 205 –141 0109 0111 0112 Net interest income ................................. Other income ........................................... Other expenses ........................................ 50 10 –21 63 13 –32 61 13 –32 64 13 –31 0119 Net income .............................................. –11 –19 –19 –18 0191 Total revenues ......................................... 187 213 211 218 0192 Total expenses ......................................... –148 –169 –169 –172 0199 Net income or loss .................................. 39 44 42 46 172 11,683 0101 0102 10.00 Total obligations ........................................................ 13,161 12,006 11,855 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 22.60 Redemption of debt ....................................................... 2,309 13,257 –124 2,281 2,278 12,303 11,874 –300 ................... 67.15 68.00 70.00 87.00 2,278 New budget authority (gross), detail: Net borrowing ................................................................. ................... ................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 13,257 12,303 Total new budget authority (gross) .......................... Change in unpaid obligations: 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 86.97 86.98 2,281 14,284 –12,006 13,257 Balance Sheet (in millions of dollars) Identification code 99–4120–0–3–351 11,816 11,874 Outlays (gross), detail: Outlays from new permanent authority ......................... 13,161 12,006 Outlays from permanent balances ................................ ................... ................... 11,816 39 12,006 ASSETS: Non-Federal assets: 1201 Cash and investment securities ......... 1206 Accrued interest receivable on loans Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 89.00 90.00 1803 –13,257 –12,303 –11,816 Net budget authority and outlays: Budget authority ............................................................ ................... ................... Outlays ........................................................................... –96 –297 58 39 Status of Direct Loans (in millions of dollars) Identification code 99–4120–0–3–351 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 12,993 11,837 11,682 1150 Total direct loan obligations ..................................... 1995 actual 1996 actual 1997 est. 1998 est. 394 40 356 41 357 41 368 41 2,273 2,222 1,964 2,048 –24 –34 –37 –41 2,249 2,188 1,927 2,007 11,855 1699 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. 1998 est. 58 11,855 –11,855 13,161 1997 est. 2,297 12,006 –12,006 Total outlays (gross) ................................................. 13,161 –13,161 12,303 14,152 –11,855 2,048 1995 actual Identification code 99–4120–0–3–351 168 11,838 15,442 –13,161 1,964 Statement of Operations (in millions of dollars) 169 12,992 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... 2,222 Pursuant to the Agricultural Credit Act of 1987, stockholders in 11 of 13 Banks for Cooperatives voted in 1988 to merge into a single National Bank for Cooperatives. On January 1, 1995, the Springfield Bank for Cooperatives also merged with other entities, as discussed below, to form the first Agricultural Credit Bank. The remaining Cooperative entity, the St. Paul Bank for Cooperatives, 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.) Loans are also made to rural utilities, including telecommunications companies. The financial schedules below reflect the operations of the St. Paul Bank for Cooperatives. Loans are made for both seasonal and long-term needs. Total operating expenses ...................................... Capital investment: Direct loans ................................... 21.47 Outstanding, end of year .......................................... Note.—Direct loan balances exclude nonaccrual loans and sales contracts. 00.91 01.01 23.90 23.95 24.47 1163 FARM CREDIT SYSTEM—Continued 12,993 11,837 11,682 Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 2,273 1231 Disbursements: Direct loan disbursements ................... 12,992 1251 Repayments: Repayments and prepayments ................. –13,043 1263 Write-offs for default: Direct loans ............................... ................... 2,222 11,837 –12,091 –4 1,964 11,683 –11,598 –1 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ 1999 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Consolidated systemwide notes ..... 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 2999 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 104 119 114 117 2,787 2,704 2,439 2,533 29 34 34 34 1,329 1,166 1,534 837 1,346 725 1,384 745 .................. 17 .................. 20 .................. 27 .................. 30 2,541 2,425 2,132 2,193 246 279 307 340 3999 Total net position ................................ 246 279 307 340 4999 Total liabilities and net position ............ 2,787 2,704 2,439 2,533 Note.—Loans to cooperatives include nonaccrual loans and sales contracts. 1164 THE BUDGET FOR FISCAL YEAR 1998 FARM CREDIT SYSTEM—Continued BANKS FOR COOPERATIVES—Continued Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Fund balance ............................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.90 Unpaid obligations, end of year: Obligated balance: Fund balance ............................................................. 72.90 Statement of Changes in Net Worth (in millions of dollars) 1995 actual 1996 actual Beginning balance of net worth ......................... 224 246 279 307 Capital stock and participations issued ......... Capital stock and participations retired ......... Surplus retired .................................................. Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 4 –11 .................. 39 –10 .................. 11 –8 .................. 44 –14 .................. 3 –7 .................. 43 –11 .................. 5 –6 .................. 46 –12 .................. Ending balance of net worth .............................. 246 279 307 340 Identification code 99–4120–0–3–351 1997 est. 1998 est. Financing Activities (in millions of dollars) Identification code 99–4120–0–3–351 Beginning balance of outstanding system obligation ........................ 1995 actual 1996 actual 1997 est. 1998 est. 1,699 2,459 2,339 2,031 Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net 1,524 2,331 2,025 2,125 –1,287 523 –2,788 337 –2,475 142 –2,350 283 Ending balance of outstanding system obligations ................................... 2,459 2,339 2,031 2,089 Object Classification (in millions of dollars) 1996 actual Identification code 99–4120–0–3–351 11.1 f 1997 est. 1998 est. 23.2 25.2 33.0 43.0 92.0 Personnel compensation: Personnel compensation and benefits ...................................................................... Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. 5 1 3 12,992 137 23 6 1 3 11,837 137 22 6 1 3 11,682 141 22 99.9 Total obligations ........................................................ 13,161 12,006 11,855 Program and Financing (in millions of dollars) Obligations by program activity: Operating expenses: 00.01 Administrative expenses ............................................ 00.02 Interest on borrowings .............................................. 00.03 Insurance premiums .................................................. 00.04 Provision for loan losses ........................................... 00.06 Income tax expense ................................................... 00.07 Other expenses .......................................................... 1996 actual 1997 est. 41 1,007 18 48 29 62 37 1,109 16 20 30 69 39 1,198 17 15 38 69 Outlays (gross), detail: Outlays from current balances ...................................... ................... Outlays from new permanent authority ......................... 49,322 380 ................... 46,901 48,376 49,322 47,281 48,376 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –48,764 –46,749 –47,888 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 806 558 152 532 572 488 89.00 90.00 On January 1, 1995, the National Bank for Cooperatives, the Springfield Bank for Cooperatives, and the Farm Credit Bank of Springfield consolidated to form an Agricultural Credit Bank (ACB), known as CoBank ACB. This bank is headquartered in Denver, Colorado and serves eligible cooperatives nationwide, and provides funding to Agricultural Credit Associations (ACAs) in one of its regions. An ACB operates under statutory authority that combines the authorities of a FCB and a BC. In exercising its FCB authority, CoBank ACB’s charter limits its lending to ACAs located in the region previously served by the Farm Credit Bank of Springfield. As an entity lending to Cooperatives, CoBank engages in the same business activities as the St. Paul Bank for Cooperatives and it provides international loans for the financing of agricultural exports. Status of Direct Loans (in millions of dollars) 1996 actual Identification code 99–4130–0–3–351 1997 est. 1998 est. Total direct loan obligations ..................................... 48,117 46,000 47,000 1210 1231 1251 1263 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. Write-offs for default: Direct loans ............................... 14,231 48,117 –47,422 –12 14,914 46,000 –45,328 –3 15,583 47,000 –46,361 –5 1290 Outstanding, end of year .......................................... 14,914 15,583 16,217 Statement of Operations (in millions of dollars) 1996 actual 1,317 –1,008 1,406 –1,109 1,511 –1,198 0109 0111 0112 Net interest income ................................. Other income ........................................... Other expense .......................................... 269 23 –175 309 26 –198 297 15 –172 313 16 –178 0119 Net income .............................................. –152 –172 –157 –162 0191 Total revenues ......................................... 1,194 1,343 1,421 1,527 50,876 –48,376 0192 Total expenses ......................................... –1,077 –1,206 –1,281 –1,376 0199 Net income or loss .................................. 117 137 140 151 10.00 Total obligations ........................................................ 49,322 47,281 48,376 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 2,548 49,570 2,796 46,901 2,416 48,460 21.47 49,697 –47,281 1150 1,171 –902 1,376 47,000 70.00 712 1995 actual 1,281 46,000 67.15 68.00 712 Total interest income .............................. Total interest expense ............................. 1,205 48,117 52,118 –49,322 712 0101 0102 Total operating expenses ...................................... Capital investment: direct loans ................................... Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... 712 48,376 –48,376 Total outlays (gross) ................................................. 1998 est. 00.91 01.01 23.90 23.95 24.47 87.00 712 47,281 –47,281 Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 48,117 46,000 47,000 AGRICULTURAL CREDIT BANKS Identification code 99–4130–0–3–351 86.93 86.97 712 49,322 –49,322 2,796 2,416 2,500 Identification code 99–4130–0–3–351 1997 est. 1998 est. Balance Sheet (in millions of dollars) New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 806 152 572 48,764 46,749 47,888 Total new budget authority (gross) .......................... 49,570 46,901 48,460 Identification code 99–4130–0–3–351 ASSETS: Non-Federal assets: 1201 Cash and investment securities ......... 1995 actual 1996 actual 2,652 2,915 1997 est. 2,488 1998 est. 2,504 GOVERNMENT-SPONSORED ENTERPRISES 1206 1601 1603 1699 Accrued interest receivable on loans Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: Direct loans, gross .............................. Allowance for estimated uncollectible loans and interest (–) .................... 165 167 157 172 FARM CREDIT BANKS Program and Financing (in millions of dollars) Identification code 99–4160–0–3–371 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ 14,237 14,914 15,583 16,217 –170 –208 –225 –235 14,067 14,706 15,358 15,982 131 138 153 153 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Consolidated systemwide notes ..... 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 17,015 17,926 18,156 18,811 2999 1803 1999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 142 129 140 145 10,805 4,717 14,510 1,818 14,580 1,900 15,052 2,000 12 126 9 180 10 181 10 188 15,802 16,646 16,811 17,395 1,213 1,280 1,345 1,416 3999 Total net position ................................ 1,213 1,280 1,345 1,416 4999 Total liabilities and net position ............ 17,015 17,926 18,156 18,811 Obligations by program activity: Operating expenses: 00.01 Administrative expenses ............................................ 00.02 Interest on borrowings .............................................. 00.03 Insurance premiums .................................................. 00.04 Provision for loan losses ........................................... 00.05 Losses/gains on property .......................................... 00.06 Other expenses .......................................................... 1995 actual 1996 actual 1997 est. 1998 est. Beginning balance of net worth ......................... 1,210 1,213 1,281 1,345 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 6 –52 117 –32 –36 .................. –38 138 –32 .................. 4 –46 140 –34 .................. 4 –46 151 –38 .................. Ending balance of net worth .............................. 1,213 1,281 1,345 1,416 Financing Activities (in millions of dollars) Identification code 99–4130–0–3–351 Beginning balance of outstanding system obligations ...................... Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net Ending balance of outstanding system obligations ................................... 1995 actual 1996 actual 1997 est. 1998 est. 13,736 15,320 15,964 16,116 7,768 10,663 7,200 7,500 –5,505 –679 –7,079 –2,940 –7,130 82 –7,030 100 1996 actual 1997 est. 100 2,356 13 9 –4 252 1998 est. 103 104 2,586 2,774 13 12 6 3 –2 ................... 169 149 00.91 01.01 Total operating expenses ...................................... Capital investment: Direct loans ................................... 2,726 29,160 2,875 28,789 3,042 30,083 10.00 Total obligations ........................................................ 31,886 31,664 33,125 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 6,083 32,928 7,125 31,872 7,333 33,176 39,011 –31,886 38,997 –31,664 40,509 –33,125 7,125 7,333 7,384 21.47 23.90 23.95 24.47 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 3,354 1,598 1,040 29,574 30,274 32,136 Total new budget authority (gross) .......................... 32,928 31,872 33,176 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Fund balance ............................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.90 Unpaid obligations, end of year: Obligated balance: Fund balance ............................................................. 771 31,886 –31,803 854 31,664 –31,842 676 33,125 –33,243 854 676 558 Outlays (gross), detail: Outlays from new permanent authority ......................... 31,803 31,842 Outlays from permanent balances ................................ ................... ................... 33,176 67 67.15 68.00 70.00 Statement of Changes in Net Worth (in millions of dollars) Identification code 99–4130–0–3–351 1165 FARM CREDIT SYSTEM—Continued 72.90 86.97 86.98 87.00 Total outlays (gross) ................................................. 31,803 31,842 33,243 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –29,574 –30,274 –32,136 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 3,354 2,229 1,598 1,568 1,040 1,107 89.00 90.00 Status of Direct Loans (in millions of dollars) 15,320 15,964 16,116 16,686 Object Classification (in millions of dollars) Identification code 99–4130–0–3–351 1996 actual 1997 est. Identification code 99–4160–0–3–371 Personnel compensation and benefits .......................... Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. 35 6 19 48,117 1,007 138 32 5 16 46,000 1,109 119 34 5 17 47,000 1,198 122 99.9 Total obligations ........................................................ 49,322 47,281 48,376 1997 est. 1998 est. 1150 Total direct loan obligations ..................................... 29,160 28,789 30,083 1210 1231 1251 1263 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. Write-offs for default: Direct loans ............................... 36,536 29,077 –26,417 1 39,197 28,967 –27,005 –3 41,156 30,201 –28,684 –2 1290 Outstanding, end of year .......................................... 39,197 41,156 42,671 1998 est. 12.1 23.2 25.2 33.0 43.0 92.0 1996 actual Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 29,160 28,789 30,083 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 1166 THE BUDGET FOR FISCAL YEAR 1998 FARM CREDIT SYSTEM—Continued FARM CREDIT BANKS—Continued LIABILITIES: Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Consolidated systemwide notes ..... 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 2104 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 continued through mid-1995. As a result of this restructuring activity, 6 FCBs headquartered in the following cities, remain: AgFirst FCB, Columbia, South Carolina; AgAmerica FCB, Spokane, Washington; AgriBank FCB, St. Paul, Minnesota; FCB of Wichita, Wichita, Kansas; FCB of Texas, Austin, Texas; and Western FCB, Sacramento, California. The FCBs serve as discount banks and as of October 1, 1996 provided funds to 32 Federal Land Credit Associations (FLCA), 66 Production Credit Associations (PCAs), and 60 Agricultural Credit Associations (ACAs). These direct lender associations, in turn, make short-term production loans (PCAs and ACAs) and long-term real estate loans (FLCAs and ACAs) to eligible farmers and ranchers. Also, as of January 1, 1996, 69 Federal Land Bank Associations originated and serviced long-term real estate loans for 2 of the 6 FCBs that have no affiliated FLCAs. 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. Statement of Operations (in millions of dollars) Identification code 99–4160–0–3–371 1995 actual 1996 actual 1997 est. 2999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 276 272 225 224 28,532 10,060 31,860 10,086 31,496 12,048 33,206 11,378 597 437 662 455 719 479 829 457 39,902 43,335 44,967 46,094 4,129 4,290 4,332 4,420 3999 Total net position ................................ 4,129 4,290 4,332 4,420 4999 Total liabilities and net position ............ 44,031 47,625 49,299 50,514 Statement of Changes in Net Worth (in millions of dollars) 1995 actual 1996 actual Beginning balance of net worth ......................... 3,964 4,129 4,290 4,332 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 37 –121 392 –146 3 77 –99 432 –251 2 39 –69 394 –323 1 37 –55 410 –304 .................. Ending balance of net worth .............................. 4,129 4,290 4,332 4,420 Identification code 99–4160–0–3–371 Total interest income .............................. Total interest expense ............................. 3,011 –2,302 3,111 –2,356 3,253 –2,586 3,436 –2,774 0109 0111 0112 Net interest income ................................. Other income ........................................... Other expenses ........................................ 709 44 –361 755 47 –370 667 17 –289 662 16 –268 Financing Activities (in millions of dollars) Identification code 99–4160–0–3–371 Beginning balance of outstanding system obligations ...................... 1995 actual 1996 actual 0119 Net income .............................................. –317 –323 –272 –252 0191 Total revenues ......................................... 3,055 3,158 3,270 3,452 0192 Total expenses ......................................... –2,663 –2,726 –2,875 –3,042 0199 Net income or loss .................................. 392 432 395 410 ASSETS: Non-Federal assets: 1201 Cash and investment securities ......... 1206 Accrued Interest Receivable ............... Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 1803 1999 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ Total assets ........................................ 6,708 810 7,487 781 38,651 41,994 43,956 30,137 40,404 41,803 42,594 –29,891 286 –38,432 1,371 –41,069 1,228 –40,471 –682 Ending balance of outstanding system obligations ................................... 38,651 41,994 43,956 45,397 Object Classification (in millions of dollars) 1996 actual f 39,198 1997 est. 1998 est. 11.1 23.2 25.2 33.0 43.0 92.0 99.5 Personnel compensation: Full-time permanent ............. Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. Below reporting threshold .............................................. 80 19 13 29,160 2,356 257 1 82 83 20 21 13 12 28,789 30,083 2,585 2,774 174 152 1 ................... 99.9 Total obligations ........................................................ 31,886 31,664 33,125 FEDERAL AGRICULTURAL MORTGAGE CORPORATION 1997 est. 1998 est. Program and Financing (in millions of dollars) Identification code 99–4180–0–3–351 36,536 1998 est. Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net Balance Sheet (in millions of dollars) 1996 actual 1997 est. 38,119 Identification code 99–4160–0–3–371 1995 actual 1998 est. 1998 est. 0101 0102 Identification code 99–4160–0–3–371 1997 est. 7,544 806 40,848 7,618 819 41,967 1996 actual 1997 est. 1998 est. 00.01 Obligations by program activity: Administrative expenses and taxes ............................... 5 6 8 10.00 Total obligations ........................................................ 5 6 8 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 11 6 12 9 15 13 17 –5 21 –6 28 –8 12 15 20 21.47 –548 –494 –444 –435 35,988 38,704 40,404 41,532 525 653 545 545 44,031 47,625 49,299 50,514 23.90 23.95 24.47 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... GOVERNMENT-SPONSORED ENTERPRISES New budget authority (gross), detail: Spending authority from offsetting collections (gross): Offsetting collections (cash) ..................................... 6 9 13 73.10 73.20 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 5 –5 6 –6 8 –8 86.97 Outlays (gross), detail: Outlays from new permanent authority ......................... 5 6 8 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –6 –9 –13 68.00 89.00 90.00 1167 FARM CREDIT SYSTEM—Continued Net budget authority and outlays: Budget authority ............................................................ ................... ................... ................... Outlays ........................................................................... –1 –3 –5 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 that meet minimum credit standards (qualified loans). 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 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, and 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 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 the lenders, poolers or investors as had been required under its original authority. The 1996 Act also increased Farmer Mac’s capital requirements over time and expanded the regulatory authorities of the FCA. Farmer Mac operates through two programs, ‘‘Farmer Mac I,’’ which involves qualified loans, and ‘‘Farmer Mac II,’’ which involves guaranteed portions of USDA guaranteed loans. Farmer Mac operates by: (i) purchasing newly originated or existing qualified loans or guaranteed portions from lenders; and (ii) 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. Increased competition among agricultural lenders, stimulated by access to the secondary market, should result in more favorable rates and terms for agricultural borrowers. 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 comes from several sources: sale of common and preferred stock; issuance of debt obligations; gain on sale of guaranteed loan-backed securities; guarantee fees; and income from investments. 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. The Act provides for the actuarial soundness of the guarantee fee to be reviewed annually by the Comptroller General in a report to Congress. The soundness of the Farmer Mac I program is maintained through the application of multiple procedures. First, all loans are screened against Farmer Mac’s credit underwriting and appraisal standards. Second, Farmer Mac assesses annual guarantee fees set at levels determined, with the assistance of computer modeling tools to evaluate Farmer Mac’s portfolio under conditions of economic stress, to be adequate for potential risks undertaken. Third, Farmer Mac controls interest rate risk through matched funding and requirement of yield maintenance provisions for mortgages that prepay. Fourth, Farmer Mac’s portfolio of loans and guaranteed securities must conform to geographic and commodity diversification standards set by the Board. Fifth, Farmer Mac maintains an allowance for loan losses determined to be adequate to cover anticipated losses. Lastly, Farmer Mac must maintain core and risk based capital as provided in the Act and FCA regulations. In the Farmer Mac II program, the risks are minimal because only the USDA guaranteed portions of loans are purchased and funding is matched to effectively eliminate interest rate risk. Available funds of Farmer Mac are invested in U.S. agency securities or other high-grade commercial investments. No stock dividends are allowed under the Act until the Board determines that an adequate loss reserve has been funded to back Farmer Mac guarantees. 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’’. The 1996 Act removed requirements that loan originators or other third parties maintain cash reserves or subordinated securities in connection with the issuance of Farmer Mac’s guaranteed 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 examination of and rulemaking for Farmer Mac, including the determination of the stress test to evaluate the adequacy of Farmer Mac’s capital and the establishment of risk-based capital requirements after February 1999. The 1996 amendments to the Farmer Mac title expanded FCA’s regulatory authority to include provisions for establishing a conservatorship or receivership, if necessary, and provided for increased levels or core capital phased in over three years. Lastly, during the capital phase-in period the U.S. Treasury and FCA jointly monitor Farmer Mac’s financial condition and report to Congress biannually, as requested by Congress in connection with the enactment of the 1996 Act. Status of Guaranteed Loans (in millions of dollars) Identification code 99–4180–0–3–351 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on commitments: 2111 Limitation on guaranteed loans made by private lenders .............................................................................. ................... ................... ................... 2131 Guaranteed loan commitments exempt from limitation 199 960 1,191 2150 Total guaranteed loan commitments ........................ 199 960 1,191 2210 2231 2251 Cumulative balance of guaranteed loans outstanding: Outstanding, start of year ............................................. Disbursements of new guaranteed loans ...................... Repayments and prepayments ...................................... 506 199 –107 598 960 –245 1,313 1,191 –423 1168 THE BUDGET FOR FISCAL YEAR 1998 FARM CREDIT SYSTEM—Continued 01.04 01.05 01.06 FEDERAL AGRICULTURAL MORTGAGE CORPORATION—Continued Status of Guaranteed Loans (in millions of dollars)—Continued 1996 actual Identification code 99–4180–0–3–351 2290 Outstanding, end of year .......................................... 2299 Memorandum: Guaranteed amount of guaranteed loans outstanding, end of year ................................................................ 1997 est. 598 1998 est. 1,313 2,081 Net increase in advances ......................................... 31,174 ................... ................... Net increase in investments ..................................... ................... 13,304 ................... Repurchase of capital stock ..................................... 1,204 1,250 1,250 01.91 Total capital investment ....................................... 32,387 14,569 1,259 10.00 Total obligations ........................................................ 47,607 29,262 15,952 148 ................... 47,459 29,357 94 17,609 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... 22.00 New budget authority (gross) ........................................ 21.47 598 1,313 2,081 Statement of Operations (in millions of dollars) 1998 est. Total budgetary resources available for obligation 47,607 New obligations ............................................................. –47,607 Unobligated balance available, end of year: Authority to borrow ................................................................... ................... 29,357 –29,262 17,703 –15,952 94 1,751 1995 actual 1996 actual 0111 0112 Net interest income ................................. Allocated admin expense ........................ 3 –3 3 –3 2 –1 3 –2 0119 0121 0122 Net income or loss (–) ............................ Guarantee fee income ............................. Allocated admin expense ........................ .................. .................. .................. .................. 2 –2 1 4 –3 1 7 –4 67.15 68.00 New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 31,209 17,927 17,609 0129 0131 0132 Net income or loss (–) ............................ Gain on issuance of MBS ....................... Allocated admin expense ........................ .................. .................. .................. .................. 1 .................. 1 3 –2 3 3 –2 70.00 Total new budget authority (gross) .......................... 47,459 29,357 17,609 0139 Net income or loss (–) ............................ .................. 1 1 1 0199 Net income or loss .................................. .................. 1 3 5 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: 72.41 U.S. Securities: Par value ..................................... 72.47 Authority to borrow (obligated balance net of U.S. Treasury and agency securities held) ...... 72.90 Fund balance ........................................................ 2,630 1,695 1,700 2,231 449 3,648 358 3,437 300 5,310 47,607 –47,216 5,701 29,262 –29,527 5,437 15,952 –17,609 74.41 74.47 74.90 Total unpaid obligations, start of year ................ New obligations ............................................................. Total outlays (gross) ...................................................... Unpaid obligations, end of year: Obligated balance: U.S. Securities: Par value ..................................... Authority to borrow ............................................... Fund balance ........................................................ 1,695 3,648 358 1,700 3,437 300 1,700 1,780 300 74.99 Total unpaid obligations, end of year .................. 5,701 5,437 3,780 Identification code 99–4180–0–3–351 1997 est. 23.90 23.95 24.47 Balance Sheet (in millions of dollars) Identification code 99–4180–0–3–351 1201 ASSETS: Non-Federal assets: Investment in securities .................................................... 1995 actual 1996 actual 1997 est. 72.99 73.10 73.20 1998 est. 619 553 650 696 Total assets ........................................ LIABILITIES: 2203 Non-Federal liabilities: Debt ................... 619 553 650 696 607 538 598 639 2999 607 538 598 639 12 15 52 57 1999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 3999 Total net position ................................ 12 15 52 57 86.97 86.98 4999 Total liabilities and net position ............ 619 553 650 696 87.00 Object Classification (in millions of dollars) Identification code 99–4180–0–3–351 11.1 f 25.2 99.5 Personnel compensation: Personnel compensation and benefits ...................................................................... Other services ................................................................ Below reporting threshold .............................................. 99.9 Total obligations ........................................................ 1996 actual 1997 est. 1998 est. 2 3 4 2 3 4 1 ................... ................... 5 6 16,250 Outlays (gross), detail: Outlays from new permanent authority ......................... 47,216 Outlays from permanent balances ................................ ................... Total outlays (gross) ................................................. 47,216 11,430 ................... 29,357 17,609 170 ................... 29,527 17,609 Offsets: Against gross budget authority and outlays: Offsetting collections (cash) from: Non-Federal sources: 88.40 Collections from non-Federal sources .............. –18,215 –17,625 –17,609 88.40 Net decrease in advances ................................ ................... –302 ................... 88.40 Net decrease in investments ........................... –12,994 ................... ................... 88.90 Total, offsetting collections (cash) .................. –31,209 89.00 90.00 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 16,250 16,007 –17,927 –17,609 8 11,430 ................... 11,600 ................... FEDERAL HOME LOAN BANK SYSTEM Status of Direct Loans (in millions of dollars) FEDERAL HOME LOAN BANKS Identification code 99–4200–0–3–371 Program and Financing (in millions of dollars) Identification code 99–4200–0–3–371 Obligations by program activity: Operating expenses: 00.01 Administrative expenses including FHFB assessments .................................................................... 00.02 Affordable Housing program ..................................... 00.03 Interest on consolidated obligations and loss on debt retirement ..................................................... 00.04 Interest on members’ deposits and other borrowings ....................................................................... 00.05 Payment to REFCORP ................................................ 00.06 Cash dividends on capital stock .............................. 00.91 01.01 Total operating expenses ...................................... Capital investment: Investment in bank premises ................................... 1996 actual 1997 est. 1996 actual 1997 est. 1998 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 796,853 800,000 800,000 1998 est. 240 115 223 120 223 120 13,027 12,500 12,500 982 300 556 1,000 300 550 1,000 300 550 15,220 14,693 14,693 9 15 9 1150 Total direct loan obligations ..................................... 796,853 800,000 800,000 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 122,128 796,853 –765,679 153,302 800,000 –800,302 153,000 800,000 –800,000 1290 Outstanding, end of year .......................................... 153,302 153,000 153,000 The 12 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 GOVERNMENT-SPONSORED ENTERPRISES 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 in order to provide access to housing for all Americans and to improve the quality of their communities. To accomplish this mission, the FHLBanks make loans, called advances, and provide other credit products and services to their nearly 6,000 member commercial banks, savings associations, insurance companies, and credit unions. Advances and letters of credit must be fully secured by eligible collateral and longterm advances may be made only for the purpose of providing funds for residential housing finance. 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, and Guam. Advances outstanding on September 30, 1996 totaled approximately $153.3 billion, a net increase of approximately $31.2 billion from the September 30, 1995 level of $122.1 billion. The principal source of funds for the lending operation is the sale of consolidated obligations to the public. On September 30, 1996, $243.5 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 $15.4 billion and total capital amounted to $16.5 billion as of September 30, 1996. 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 operating expenses of the FHLBanks are paid from their own income and are not included in the budget of the United States. Included in these expenses are the assessments by the Finance Board to cover its administrative and other costs. The Finance Board’s budget and expenditures, however, are included in the budget of the United States. 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 a minimum of $100 million annually. The Act also requires that the FHLBanks contribute $300 million annually to assist in the payment of interest on bonds issued by the Resolution Funding Corportion. The forecast data for 1997 and 1998 contained in this material represents estimates and should not be construed as an official forecast of the FHLBanks System’s future position. Statement of Operations (in millions of dollars) Identification code 99–4200–0–3–371 0101 0102 0109 1169 FEDERAL HOME LOAN BANK SYSTEM—Continued 1995 actual 1996 actual 1997 est. 1998 est. Revenue ................................................... Expense (excludes payments to REFCORP) ............................................ 14,568 15,712 15,100 15,100 –13,370 –14,364 –13,843 –13,843 Net income .............................................. 1,198 1,348 1,257 1,257 Balance Sheet (in millions of dollars) Identification code 99–4200–0–3–371 ASSETS: Investments in US securities: 1102 Federal assets: Treasury securities, net .................................................. Non-Federal assets: 1201 Investments in non-Federal securities, net .................................................. 1206 Accounts receivable ............................ 1401 Net value of assets related to direct loans receivable: Direct loans receivable, gross .......................................... Other Federal assets: 1801 Cash and other monetary assets ....... 1803 Property, plant and equipment, net 1901 Other assets ........................................ 1999 1995 actual 1996 actual 1997 est. 1998 est. 2,630 1,695 1,700 1,700 134,990 3,532 121,996 3,883 135,300 3,800 135,300 3,800 122,128 153,302 153,000 153,000 449 157 941 358 156 339 300 160 300 300 160 300 264,828 281,728 294,560 294,560 Total assets ........................................ LIABILITIES: 2101 Federal liabilities: REFCORP and AHP .... Non-Federal liabilities: 2201 Accounts payable ................................ 2202 Interest payable .................................. 2203 Debt ..................................................... Other: 2207 Deposit funds and other borrowings ............................................ 2207 Other ............................................... 347 388 390 390 185 3,946 226,406 234 4,259 243,533 200 4,200 255,000 200 3,000 255,000 18,437 832 16,038 820 16,000 647 16,000 190 2999 250,154 265,272 276,437 274,780 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 14,674 16,456 18,123 19,780 3999 Total net position ................................ 14,674 16,456 18,123 19,780 4999 Total liabilities and net position ............ 264,828 281,728 294,560 294,560 Object Classification (in millions of dollars) 1996 actual Identification code 99–4200–0–3–371 11.1 12.1 21.0 23.3 24.0 25.2 31.0 32.0 33.0 33.0 41.0 43.0 43.0 92.0 99.9 1997 est. 1998 est. Personnel compensation: Full-time permanent ............. 98 80 80 Civilian personnel benefits ............................................ 25 26 26 Travel and transportation of persons ............................ 6 6 6 Communications, utilities, and other rent .................... 21 22 22 Printing and reproduction .............................................. 7 7 7 Other services ................................................................ 76 75 75 Equipment ...................................................................... 7 7 7 Land and structures ...................................................... 9 15 9 Investments and loans: Net increase in advances ......................................... 31,174 ................... ................... Net increase in investments ..................................... ................... 13,304 ................... Subsidies (Affordable Housing Program) ...................... 115 120 120 Interest and dividends: Interest and cash dividends ..................................... 14,565 14,050 14,050 REFCORP interest ...................................................... 300 300 300 Repurchase of capital stock (gross) ............................. 1,204 1,250 1,250 f Total obligations ........................................................ 47,607 29,262 15,952 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 1170 THE BUDGET FOR FISCAL YEAR 1998 FEDERAL HOME LOAN BANK SYSTEM—Continued FINANCING CORPORATION—Continued 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) 1995 actual 1996 actual 0101 0102 Revenue ................................................... Expense .................................................... 897 –795 906 –795 915 –795 926 –795 0109 Net income .............................................. 102 111 120 131 Identification code 99–4033–0–3–373 1997 est. 1995 actual ASSETS: Investments in US securities: 1102 Federal assets: Segregated accounts investment, net .............................. Other Federal assets: 1801 Cash, cash equivalents, and interest receivable ....................................... 1901 Other assets ........................................ 1996 actual 1997 est. Identification code 99–4029–0–3–373 1,475 1,606 279 13 281 12 281 12 281 11 Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Interest payable .................................. 2203 Debt ..................................................... 2207 Other ................................................... 1,536 1,648 1,768 1,898 236 8,141 85 236 8,142 85 236 8,144 83 236 8,145 81 2999 8,462 8,463 8,463 8,462 Total liabilities .................................... NET POSITION: 3100 FICO capital stock purchased by FHLBanks ............................................ Invested capital: 3200 FSLIC capital certificates ................... 3200 FSLIC nonvoting capital stock ............ 3300 Cumulative results of operations ............ 680 680 680 680 –7,568 –603 565 –7,568 –603 675 –7,568 –603 796 –7,568 –603 927 3999 Total net position ................................ –6,926 –6,816 –6,695 –6,564 4999 Total liabilities and net position ............ 1,536 1,647 1,768 1,898 f 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. REFCORP is subject to the general oversight and direction of the Thrift Depositor Protection Oversight Board. The dayto-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 1996 actual 1997 est. 1998 est. Revenue ................................................... Expense .................................................... 2,895 –2,626 2,925 –2,633 2,942 –2,626 2,967 –2,626 0109 Net income .............................................. 269 292 316 341 Balance Sheet (in millions of dollars) 1995 actual 1996 actual ASSETS: Investments in US securities: 1102 Federal assets: Principal fund account investment, net .................... 1206 Non-Federal assets: Assessments receivable for interest expense .................... 1901 Other Federal assets: Other assets ........ 3,567 3,856 4,168 4,504 881 1 888 1 881 .................. 881 .................. 1999 Identification code 99–4029–0–3–373 1,355 1995 actual 0101 0102 1998 est. 1,244 1999 Statement of Operations (in millions of dollars) 1998 est. Balance Sheet (in millions of dollars) Identification code 99–4033–0–3–373 two members selected by the Oversight Board 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. REFCORP and its Directorate are subject to regulations, orders and directions of the Thrift Depositor Protection Oversight Board. FIRREA and the regulations adopted by the Thrift Depositor Protection Oversight Board 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. 1997 est. 1998 est. Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Accrued interest payable on longterm obligations ............................. 2203 Debt ..................................................... 4,449 4,745 5,049 5,385 881 30,076 888 30,074 881 30,072 881 30,069 2999 30,957 30,962 30,953 30,950 2,513 2,513 2,513 2,513 –31,286 –31,286 –31,286 –31,286 1,057 1,208 1,057 1,499 1,057 1,813 1,057 2,152 Total liabilities .................................... NET POSITION: 3100 Nonvoting capital stock issued to FHLBanks ............................................ Invested capital: 3200 RTC nonredeemable capital certificates ............................................... 3200 Contributed capital—principal fund assessments ................................... 3300 Cumulative results of operations ............ f 3999 Total net position ................................ –26,508 –26,217 –25,903 –25,564 4999 Total liabilities and net position ............ 4,449 4,745 5,050 5,386 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Program and Financing (in millions of dollars) Identification code 99–4450–0–3–803 Obligations by program activity: Board operating expenses: 00.01 Monetary and economic policy .................................. 00.02 Services to financial institutions and the public 00.03 Supervision and regulation of financial institutions 00.04 System policy direction and oversight ...................... 1995 actual 1996 est. 1997 est. 72 3 65 32 73 3 66 33 76 4 68 34 00.91 01.01 Subtotal: Board operating expenses ..................... Office of Inspector General operating expenses ........... 172 3 175 3 182 3 10.00 Total obligations ........................................................ 175 178 185 GOVERNMENT-SPONSORED ENTERPRISES Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested balance ................................................... 22.00 New budget authority (gross) ........................................ 21.40 23.90 23.95 24.40 68.00 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested balance ................................................... New budget authority (gross), detail: Spending authority from offsetting collections (gross): Offsetting collections (cash) ..................................... 1171 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM—Continued –3 176 –2 172 –8 185 173 –175 170 –178 177 –185 –2 –8 –8 176 172 Federal Reserve notes are not included, since they are reimbursed in full by the Federal Reserve banks. Statement of Operations (in millions of dollars) 1995 actual Identification code 99–4450–0–3–803 1996 est. 1997 est. 0101 0102 Revenue .......................................................................... Expense .......................................................................... 171 –174 176 –175 172 –178 0109 Net income or loss (–) .................................................. –3 1 –6 185 Balance Sheet (in millions of dollars) Change in unpaid obligations: 72.40 Unpaid obligations, start of year: Obligated balance: Appropriation ............................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.40 Unpaid obligations, end of year: Obligated balance: Appropriation ............................................................. 1995 actual Identification code 99–4450–0–3–803 18 175 –175 18 178 –178 18 185 –185 18 18 18 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 160 15 162 16 175 10 87.00 Total outlays (gross) ................................................. 175 178 185 3 3 15 125 16 119 10 129 1999 143 138 142 24 21 21 24 21 21 –6 125 –2 119 –8 129 Total assets ............................................................... LIABILITIES: 2201 Non-Federal liabilities: Accounts payable and accrued liabilities .................................................................... 89.00 90.00 Total liabilities .......................................................... NET POSITION: 3100 Appropriated capital ...................................................... 3200 Invested capital ............................................................. –176 –172 1997 est. 3 2999 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. 1996 est. ASSETS: 1206 Non-Federal assets: Receivables, net ........................... Other Federal assets: 1801 Cash in bank ............................................................. 1803 Property, plant and equipment, net .......................... –185 3999 Total net position ...................................................... 119 117 121 Net budget authority and outlays: Budget authority ............................................................ ................... ................... ................... Outlays ........................................................................... –1 6 ................... 4999 Total liabilities and net position ................................... 143 138 142 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 Object Classification (in millions of dollars) 1995 actual Identification code 99–4450–0–3–803 11.1 11.3 11.5 11.9 12.1 21.0 23.3 Reimbursable obligations: Personnel compensation: Full-time permanent ............................................. Other than full-time permanent ........................... Other personnel compensation ............................. 1996 est. 1997 est. 95 1 2 100 1 2 104 1 2 98 16 5 103 17 5 107 17 5 24.0 25.1 25.2 26.0 31.0 99.0 25.2 Total personnel compensation ......................... Civilian personnel benefits ....................................... Travel and transportation of persons ....................... Communications, utilities, and miscellaneous charges ................................................................. Printing and reproduction ......................................... Advisory and assistance services ............................. Other services ............................................................ Supplies and materials ............................................. Equipment ................................................................. Subtotal, reimbursable obligations ............................... Allocation Account: Other services ................................ 9 3 1 18 5 17 172 3 10 3 2 17 6 12 175 3 10 3 2 18 6 14 182 3 99.9 Total obligations ........................................................ 175 178 185 Personnel Summary Identification code 99–4450–0–3–803 Total compensable workyears: 2005 Full-time equivalent of overtime and holiday hours 2011 Exempt Full-time equivalent employment ..................... 1 Includes 1995 actual 38 1,661 32, 32, and 32 positions respectively for the Office of Inspector General. 1996 est. 38 1,683 1997 est. 38 1,733