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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. 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 1997 actual 1998 est. 1999 est. —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. Obligations by program activity: Operating expenses: 00.01 Interest expense ........................................................ 00.02 Administrative expenses and taxes .......................... 2,590 710 2,461 586 2,584 615 00.91 —The College Construction Loan Insurance Association was 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. Pursuant to legislation enacted in 1996, the association was fully privatized in 1997 and is no longer a Government-sponsored enterprise. —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-, moderate-, and middle-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 provided 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 3,300 3,047 3,199 01.01 01.02 Total operating expenses ...................................... Capital investment: Loans, etc .................................................................. Investments, dividends, and other assets ................ 10,019 600 8,224 700 8,106 650 01.91 Total capital investment ....................................... 10,619 8,924 8,756 10.00 Total obligations ........................................................ 13,919 11,971 11,955 22.00 23.95 Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. 13,919 –13,919 11,971 –11,971 11,955 –11,955 –4,294 –8,029 –6,045 67.15 68.00 New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 18,213 20,000 18,000 70.00 Total new budget authority (gross) .......................... 13,919 11,971 11,955 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: U.S. Securities: Par value, start of year ................... 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.41 Unpaid obligations, end of year: Obligated balance: U.S. Securities: Par value, end of year ..................... 1,291 13,919 –13,828 1,382 11,971 –12,013 1,340 11,955 –11,888 1,382 1,340 1,407 Outlays (gross), detail: Outlays from new permanent authority ......................... 13,828 12,013 11,888 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –18,213 –20,000 –18,000 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... –4,294 –4,385 –8,029 –7,987 –6,045 –6,112 72.41 86.97 89.00 90.00 Status of Direct Loans (in millions of dollars) Identification code 99–1500–0–3–502 1997 actual 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 10,019 8,224 8,106 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 ............................................................. 1210 1231 10,019 8,224 8,106 37,391 10,019 34,259 8,224 28,857 8,106 –4,565 –3,670 –2,596 –8,626 –10,000 –10,000 1165 1166 THE BUDGET FOR FISCAL YEAR 1999 DEPARTMENT OF EDUCATION—Continued STUDENT LOAN MARKETING ASSOCIATION—Continued Status of Direct Loans (in millions of dollars)—Continued 1997 actual Identification code 99–1500–0–3–502 1998 est. 1999 est. 1264 Write-offs for default: Other adjustments, net ............. 40 44 48 1290 Outstanding, end of year .......................................... 34,259 28,857 24,415 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] 1997 actual 1998 est. 1999 est. Guaranteed student loans: Stafford (formerly ‘‘regular’’): Purchased ........................................................................... Warehoused ........................................................................ PLUS/SLS: Purchased .............................................................. 7,288 6,622 6,587 668 .................... .................... 614 554 546 Subtotal, Guaranteed student loans ............................. Health professions loans: Purchased .......................................... Other ............................................................................................ 8,570 127 1,322 7,176 60 988 7,133 0 975 Under the reorganization, which became effective on August 8, 1997, the shares of common stock of the GSE (Student Loan Marketing Association) were converted on a one-forone basis to shares of the new Delaware chartered holding company (SLM Holding Corporation). The GSE became a wholly owned subsidiary of SLM Holding Corporation. The legal status of the GSE’s debt obligations, including State tax exemptions, are fully preserved. According to the authorizing legislation, the GSE must wind down and be liquidated by September 30, 2008. All obligations of the GSE remaining upon liquidation must be placed into a defeasance trust. The GSE’s outstanding adjustable rate cumulative preferred stock is required to be redeemed prior to such date. As required by legislation, the shareholders’ approval of the restructuring plan resulted in the transfer of resources from Sallie Mae to the District of Columbia for school facility improvements. The District received a total of $41.8 million, of which $36.8 million came from the sale of Sallie Mae stock warrants issued to the District, and $5 million was a payment from the Association for its decision to retain ‘‘Sallie Mae’’ as a tradename. 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. Statement of Operations (in millions of dollars) Identification code 99–1500–0–3–502 1996 actual 1997 actual 1998 est. 1999 est. 0101 0102 Revenue ................................................... Expense .................................................... .................. .................. 3,808 –3,300 .................. .................. .................. .................. 0109 Net income .............................................. .................. 508 .................. .................. 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 Total ............................................................................... 10,019 8,224 8,108 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. Restructuring.—Pursuant to authority enacted in the Student Loan Marketing Association Act of 1996, Sallie Mae shareholders, on July 31, 1997, approved a plan to reorganize the corporation as a fully private, State chartered entity. 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 1996 actual 1997 actual 1998 est. 1999 est. 1,281 10 852 1,382 .................. 773 1,340 .................. 812 1,407 .................. 853 6,971 483 15 5,318 436 19 2,671 458 20 823 481 21 37,538 34,384 28,962 24,504 –147 –125 –105 –89 37,391 34,259 28,857 24,415 35 246 100 91 211 572 95 221 600 100 232 630 Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Interest payable .................................. 2203 Debt ..................................................... 2207 Other ................................................... 47,384 43,061 35,074 28,962 472 45,252 643 468 40,230 1,110 491 32,642 1,166 516 26,582 1,224 2999 46,367 41,808 34,299 28,322 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1,017 1,253 775 640 3999 Total net position ................................ 1,017 1,253 775 640 4999 Total liabilities and net position ............ 47,384 43,061 35,074 28,962 Object Classification (in millions of dollars) Identification code 99–1500–0–3–502 11.1 Personnel compensation: Full-time permanent ............. 1997 actual 63 1998 est. 46 1999 est. 41 GOVERNMENT-SPONSORED ENTERPRISES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 12.1 21.0 23.3 25.1 25.2 31.0 33.0 43.0 Civilian personnel benefits ............................................ Travel and transportation of persons ............................ Communications, utilities, and miscellaneous charges Advisory and assistance services .................................. Other services ................................................................ Equipment ...................................................................... Loans .............................................................................. Interest, dividends, and taxes ....................................... 16 5 17 22 357 4 10,019 3,416 12 4 12 16 256 3 8,224 3,398 11 4 11 14 230 3 8,106 3,535 99.9 Total obligations ........................................................ 13,919 11,971 11,955 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 was structured to operate as a private corporation, subject to the same state laws and regulations as any other insurance company. Accordingly, Connie Lee secured insurance licenses in each of the various states in which it planned 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 the portion of fiscal year 1997 ending February 27, 1997 (date of stock sale for privatization), Connie Lee insured $390.2 million of debt service on bonds benefitting colleges, universities and teaching hospitals. Connie Lee also provided reinsurance on bonds representing $0.9 million of debt service. 1167 sale was completed on February 27, 1997, and the $18.3 million of proceeds were 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 is shown below. 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) 1996 actual 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 1997 actual* 1998 est. 1999 est. 42 21 47 10 .................. .................. .................. .................. 155 9 37 166 .................. 39 .................. .................. .................. .................. .................. .................. 3 1 3 1 .................. .................. .................. .................. Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 2201 Non-Federal liabilities: Accounts payable 268 266 .................. .................. 9 94 28 86 .................. .................. .................. .................. 2999 1999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 103 114 .................. .................. 165 152 .................. .................. 3999 Total net position ................................ 165 152 .................. .................. 4999 Total liabilities and net position ............ 268 266 .................. .................. * Data reflects financial position on February 27, 1997. INSURANCE AND REINSURANCE ACTIVITY [In thousands of dollars] Debt service insured: Direct insurance ................................................................................................................. Reinsurance ....................................................................................................................... 1997 actual 390,209 899 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT Total .......................................................................................................................... 391,108 FEDERAL NATIONAL MORTGAGE ASSOCIATION 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. Management.—Connie Lee was 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 was required to be an administrator of a college or university. Privatization.—Legislation was enacted in 1996 that privatized 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 PORTFOLIO PROGRAMS Program and Financing (in millions of dollars) Identification code 99–2500–0–3–371 1997 actual 1998 est. 1999 est. Obligations by program activity: Operating expenses: 00.01 Interest on borrowings from the public .................... 00.02 Other costs ................................................................ 21,847 3,172 24,348 3,018 27,592 3,053 00.91 25,019 27,366 30,645 01.01 01.02 Total operating expenses ...................................... Capital investment: Mortgage purchases and loans ................................ Lease-Purchase Discounts ........................................ 65,206 80,123 87,593 302 ................... ................... 01.91 Total capital investment ....................................... 65,508 80,123 87,593 10.00 Total obligations ........................................................ 90,528 107,489 118,238 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 464,644 124,826 498,942 117,982 509,435 152,589 589,470 –90,528 616,924 –107,489 662,024 –118,238 498,942 509,435 543,786 61,390 76,295 118,069 21.40 23.90 23.95 24.40 67.10 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. New budget authority (gross), detail: Authority to borrow ........................................................ 1168 THE BUDGET FOR FISCAL YEAR 1999 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 1997 actual 1998 est. 1999 est. 67.15 Net increase or decrease in unlimited borrowing authorities ..................................................................... 67.90 68.00 Authority to borrow (total) ......................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 61,386 76,295 118,069 63,440 41,687 34,520 Total new budget authority (gross) .......................... 124,826 117,982 152,589 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Total ........................................................................... 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.40 Unpaid obligations, end of year: Obligated balance: Total ........................................................................... 6,866 90,528 –88,337 9,057 107,489 –111,862 4,684 118,238 –117,601 9,057 4,684 5,321 70.00 –4 ................... ................... 72.40 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 63,440 24,897 41,687 70,175 34,520 83,081 87.00 Total outlays (gross) ................................................. 88,337 111,862 117,601 Offsets: Against gross budget authority and outlays: Offsetting collections (cash) from: 88.00 Federal sources ..................................................... 88.40 Non-Federal sources ............................................. –130 –63,310 –130 –41,557 –130 –34,390 88.90 Total, offsetting collections (cash) .................. –63,440 –41,687 –34,520 89.00 90.00 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 61,386 24,897 76,295 70,175 118,069 83,081 Status of Direct Loans (in millions of dollars) Identification code 99–2500–0–3–371 1997 actual 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 60,971 80,344 88,484 1150 Total direct loan obligations ..................................... 60,971 80,344 88,484 293,037 321,711 366,030 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 ............. 60,290 79,623 87,093 4,916 500 500 –34,478 –35,804 –45,355 –2,054 ................... ................... 1290 321,711 1210 Outstanding, end of year .......................................... 366,030 408,268 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, 1997, Fannie Mae held a net mortgage portfolio totaling $307 billion and had net outstanding guaranteed mortgage-backed securities of over $566 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 low-, moderate-, and middle-income homebuyers. These in- clude 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 approximately $1.2 billion for 1997. 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, and passed the halfway mark in 1997. The company’s 28 Partnership Offices have delivered over $40 billion in targeted investments by tailoring Fannie Mae’s products and services to meet the unique needs of the communities in which they are located. In addition, enhancements to the company’s automated underwriting system (Desktop Underwriter 4.0) will lower underwriting costs, speed the approval process, and expand the availability of secondary market financing. 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 establishes 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 regulations, the lowand moderate-income target is 42 percent; the underserved area goal is 24 percent for the 1997–1999 period. In addition, the special affordable housing goal requires the corporation to target 14 percent of its conventional mortgage business 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 GOVERNMENT-SPONSORED ENTERPRISES DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued its housing goals for 1994, 1995, and 1996 and expects to meet or exceed all of its goals for 1997. 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 1997 was $14.1 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 1997, it earned $2.26 billion. The forecast data contained in this material has been developed based on certain general economic assumptions prevalent in the third quarter of 1997 and should not be construed as an official forecast for Fannie Mae. Income and retained earnings for the years ended September 30, 1996 and 1997 follow (in thousands of dollars): 1996 actual 24,404,500 21,008,700 27,065,400 22,931,500 Income before Federal income tax ....................................................... Federal income tax ........................................................................................ 3,395,800 1,000,300 2,395,500 9,123,000 ¥800,200 2,908,900 10,718,300 ¥862,300 Retained earnings, end of year ............................................................ 10,718,300 12,764,900 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 3600 Change In Stockholder Equity ................. 550 4,429 6 511 4,622 9 .................. 5,710 .................. .................. 6,079 .................. 319,153 358,003 401,216 446,884 1,936 178 15 2,330 202 190 2,573 .................. .................. 2,508 .................. .................. 326,267 365,867 409,499 455,471 10,718 1,549 12,765 593 15,023 –958 17,422 –2,105 3999 Total net position ................................ 12,267 13,358 14,065 15,317 4999 Total liabilities and net position ............ 338,534 379,225 423,564 470,788 Object Classification (in millions of dollars) 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 1997 actual 1998 est. 1999 est. 18 16 17 12 13 14 6 ................... ................... 92 99 109 351 397 434 1,680 1,459 1,339 4 ................... ................... 80 79 87 65,508 80,123 87,593 22,777 25,303 28,645 90,528 107,489 118,238 MORTGAGE-BACKED SECURITIES Program and Financing (in millions of dollars) Identification code 99–2501–0–3–371 4,133,900 1,225,000 Net income ............................................................................................ Retained earnings, beginning of year ........................................................... Dividends on common stock .......................................................................... 2999 1997 actual Gross revenue ................................................................................................ Gross expenses .............................................................................................. 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 ......... 1169 1997 actual 1998 est. 1999 est. 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 assets ........................................ 1996 actual 1997 actual Obligations by program activity: Capital investment: Commitments to issue MBS ......... 279,880 160,817 156,883 10.00 Balance Sheet (in millions of dollars) 00.01 Total obligations (object class 33.0) ........................ 279,880 160,817 156,883 22.00 23.95 Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. 279,880 –279,880 160,817 –160,817 156,883 –156,883 200,734 64,156 59,419 79,146 96,661 97,463 Total new budget authority (gross) .......................... 279,880 160,817 156,883 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Uninvested ................................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.40 Unpaid obligations, end of year: Obligated balance: Uninvested ................................................................. 155,523 279,880 –133,703 301,700 160,817 –207,272 255,245 156,883 –156,883 301,700 255,245 255,245 67.15 68.00 70.00 1998 est. 1999 est. New budget authority (gross), detail: Corporate borrowing authority ....................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 72.40 650 124 11 20 21 53,933 26 64,364 .................. 71,475 .................. 77,004 86.97 86.98 267,105 10,164 294,402 12,635 340,175 4,473 381,502 4,441 –253 –281 279 275 277,016 306,756 344,927 386,218 6,725 190 7,750 205 7,151 .................. 7,546 .................. 338,534 379,225 423,564 470,788 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 79,146 54,557 96,661 110,611 97,463 59,420 87.00 Total outlays (gross) ................................................. 133,703 207,272 156,883 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –79,146 –96,661 –97,463 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 200,734 54,557 64,156 110,611 59,420 59,420 89.00 90.00 1170 THE BUDGET FOR FISCAL YEAR 1999 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued 01.01 Capital investment: Mortgage purchases for portfolio 36,040 39,644 43,608 MORTGAGE-BACKED SECURITIES—Continued 10.00 Total obligations ........................................................ 47,534 53,724 60,860 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 22.60 Redemption of debt ....................................................... 23,815 45,263 –7,890 13,654 54,854 –6,956 7,828 63,653 –6,133 61,188 –47,534 61,552 –53,724 65,348 –60,860 13,654 7,828 4,488 23,216 33,927 43,789 22,047 20,927 19,864 Total new budget authority (gross) .......................... 45,263 54,854 63,653 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Uninvested ................................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.40 Unpaid obligations, end of year: Obligated balance: Uninvested ................................................................. 548 47,534 –44,981 3,101 53,724 –46,902 9,923 60,860 –52,672 3,101 9,923 18,111 Status of Direct Loans (in millions of dollars) 1997 actual Identification code 99–2501–0–3–371 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 279,880 160,817 156,883 21.40 Total direct loan obligations ..................................... 279,880 160,817 156,883 23.90 23.95 24.40 Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 1231 Disbursements: Direct loan disbursements ................... 1251 Repayments: Repayments and prepayments ................. 636,362 133,703 –79,146 690,919 207,272 –96,661 801,530 156,883 –97,463 67.15 68.00 1290 690,919 801,530 860,950 1150 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 1997 and should not be construed as an official forecast of the Corporation’s position. 1996 actual ASSETS: 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 (–) .................... 1997 actual 1998 est. 1999 est. 691,438 802,051 861,476 –521 –519 –521 –526 636,362 690,919 801,530 860,950 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 636,362 690,919 801,530 860,950 636,362 690,919 801,530 860,950 2999 636,362 690,919 801,530 860,950 Value of assets related to direct loans .......................................... 1999 Total liabilities .................................... 72.40 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 23,906 21,075 30,147 16,755 40,026 12,646 87.00 Total outlays (gross) ................................................. 44,981 46,902 52,672 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –22,047 –20,927 –19,864 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 23,216 22,934 33,927 25,975 43,789 32,808 89.00 90.00 Status of Direct Loans (in millions of dollars) 1997 actual 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 36,040 39,644 43,608 1150 636,883 1699 New budget authority (gross), detail: Net change in borrowing authorities ............................. Spending authority from offsetting collections: Offsetting collections (cash) .............................................. Identification code 99–4420–0–3–371 Balance Sheet (in millions of dollars) Identification code 99–2501–0–3–371 70.00 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. FEDERAL HOME LOAN MORTGAGE CORPORATION PORTFOLIO PROGRAMS Program and Financing (in millions of dollars) Identification code 99–4420–0–3–371 1997 actual 1998 est. 1999 est. Obligations by program activity: Operating expenses: 00.01 Interest expense and provision for loan loss ........... 00.02 Administration ........................................................... 11,011 483 13,531 549 16,628 624 00.91 11,494 14,080 17,252 Total operating expenses ...................................... Total direct loan obligations ..................................... 36,040 39,644 43,608 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 129,427 36,040 –8,302 157,165 39,644 –5,961 190,848 43,608 –2,706 1290 Outstanding, end of year .......................................... 157,165 190,848 231,750 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 1996, Freddie Mac held a net mortgage portfolio totaling nearly $138 billion and had outstanding guaranteed mortgage-backed securities of more than $554 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 GOVERNMENT-SPONSORED ENTERPRISES 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 explicitly not backed by the full faith and credit of the U.S. Government. The common stock of the corporation is owned by the public, is fully transferable, and trades on the New York 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; and 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. The Federal Housing Enterprise Financial Safety and Soundness Act of 1992 (‘‘The Act’’) added to Freddie Mac’s public mission the promotion of ‘‘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 Act also established affordable housing goals 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. The goals provide that, of the total number of dwelling units financed by Freddie Mac’s mortgage purchases, 40 percent meet the low- and moderateincome goal in 1996 and 42 percent in each of 1997, 1998, and 1999; 21 percent meet the special affordable goal in 1996 and 24 percent in each of 1997, 1998 and 1999; and 12 percent meet the special affordable goals in 1996 and 14 percent in each of 1997, 1998 and 1999, including at least $988 million in qualifying multifamily mortgage purchases in each year from 1996 through 1999. In 1996, Freddie Mac met the low- and moderate-income goal of 40 percent with purchases of 41 percent, the underserved area goal of 21 percent with purchases of 25 percent, the special affordable goal of 12 percent with purchases of 14 percent, and the multifamily portion of the special afford- 1171 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued able goal of $988 million with purchases of more than $1 billion in qualifying multifamily mortgages. 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 appointed by the President. 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 riskbased 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 $1.24 billion in 1996, a 14 percent increase over 1995 earnings of $1.091 billion. While accepting and managing higher interest rate risk, Freddie Mac has expanded its investments in retained mortgages from only $34 billion in 1992 to nearly $138 billion at the end of 1996 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 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. Balance Sheet (in millions of dollars) Identification code 99–4420–0–3–371 ASSETS: 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 1901 Other assets ........................................ 1996 actual 1997 actual 1998 est. 1999 est. 2,689 .................. .................. .................. 3,158 8,801 583 713 9,004 482 161 9,602 398 36 15,746 328 17,420 129,427 906 .................. 5,992 157,165 869 10,050 13,352 190,848 860 5,798 29,752 231,750 866 3,345 162,984 184,275 221,019 281,823 1 84 84 84 764 856 959 1,074 1101 1999 Total assets ........................................ LIABILITIES: 2101 Federal liabilities: Accounts payable ...... Non-Federal liabilities: 2201 Accounts payable ................................ 1172 THE BUDGET FOR FISCAL YEAR 1999 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT—Continued FEDERAL HOME LOAN MORTGAGE CORPORATION—Continued Status of Direct Loans (in millions of dollars) PORTFOLIO PROGRAMS—Continued Balance Sheet (in millions of dollars)—Continued Identification code 99–4420–0–3–371 2202 2203 2206 2207 2207 2207 Interest payable .................................. Debt ..................................................... Pension and other actuarial liabilities Other: Accrued payroll and benefits ......... Accrued annual leave (funded or unfunded) ................................... Other Liabilities .............................. 2999 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1997 actual Identification code 99–4440–0–3–371 1996 actual 1997 actual 1998 est. 1999 est. 1,492 146,954 7,233 1,719 160,051 7 1,981 190,848 16 2,283 243,338 37 38 45 53 62 2 .................. 2 14,363 2 19,215 2 26,298 156,484 177,127 213,158 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 103,600 106,708 109,909 273,178 6,500 7,148 7,861 Total net position ................................ 6,500 7,148 7,861 Total liabilities and net position ............ 162,984 184,275 221,019 281,823 103,600 106,708 109,909 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 471,310 103,600 –104,895 470,015 106,708 –107,999 468,724 109,909 –111,196 1290 Outstanding, end of year .......................................... 470,015 468,724 467,437 8,645 4999 Total direct loan obligations ..................................... 8,645 3999 1150 Balance Sheet (in millions of dollars) 1996 actual 1997 actual ASSETS: 1901 Other Federal assets: Underlying Mortgages .................................................. 471,310 470,015 468,724 467,437 1999 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... 471,310 470,015 468,724 467,437 471,310 470,015 468,724 467,437 2999 471,310 470,015 468,724 467,437 Identification code 99–4440–0–3–371 Object Classification (in millions of dollars) Identification code 99–4420–0–3–371 21.0 23.3 24.0 1997 actual 1998 est. 1999 est. 11 33 4 13 34 5 15 35 6 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 .......................... 289 133 13 36,040 11,011 325 158 14 39,644 13,531 366 187 15 43,608 16,628 99.9 Total obligations ........................................................ 47,534 53,724 60,860 25.2 MORTGAGE-BACKED SECURITIES Program and Financing (in millions of dollars) Identification code 99–4440–0–3–371 1997 actual 1998 est. 1999 est. 00.01 Obligations by program activity: Capital investment: Issue (sales) of participation certification .................................................................... 103,600 106,708 109,909 10.00 Total obligations (object class 33.0) ........................ 103,600 106,708 109,909 22.00 23.95 Budgetary resources available for obligation: New budget authority (gross) ........................................ New obligations ............................................................. 103,600 –103,600 106,708 –106,708 109,909 –109,909 New budget authority (gross), detail: Corporate borrowing authority (net PC pool change) Spending authority from offsetting collections: Offsetting collections (cash) .............................................. –1,295 –1,291 –1,287 104,895 107,999 111,196 70.00 Total new budget authority (gross) .......................... 103,600 106,708 109,909 73.10 73.20 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 103,600 –103,600 106,708 –106,708 1999 est. 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 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). 109,909 –109,909 67.15 68.00 Total liabilities .................................... 1998 est. BANKS FOR COOPERATIVES Program and Financing (in millions of dollars) Outlays (gross), detail: 86.97 Outlays from new permanent authority ......................... 103,600 106,708 109,909 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –104,895 –107,999 –111,196 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... –1,295 –1,295 –1,291 –1,291 –1,287 –1,287 89.00 90.00 Identification code 99–4120–0–3–351 1997 actual 1998 est. 1999 est. 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 .......................................................... 6 7 7 135 137 149 3 1 ................... 49 ................... ................... 1 7 7 10 11 12 00.91 204 Total operating expenses ...................................... 163 175 GOVERNMENT-SPONSORED ENTERPRISES 01.01 10.00 Capital investment: Direct loans ................................... 14,942 15,146 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 22.60 Redemption of debt ....................................................... 15,686 16,026 0112 Other expenses ........................................ –32 –68 –25 –26 16,201 0119 Net income .............................................. –19 –52 –12 –14 0191 Total obligations ........................................................ 15,523 Total revenues ......................................... 213 208 209 224 0192 Total expenses ......................................... –169 –202 –162 –175 0199 Net income or loss .................................. 44 6 47 49 21.40 23.90 23.95 24.40 67.15 68.00 2,281 2,171 2,191 15,306 15,706 16,280 –270 ................... ................... Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. 17,317 –15,146 17,877 –15,686 18,471 –16,201 2,171 2,191 2,270 15 106 15,691 16,174 New budget authority (gross), detail: Net borrowing ................................................................. ................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 15,306 70.00 Total new budget authority (gross) .......................... 15,306 15,706 16,280 73.10 73.20 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 15,146 –15,146 15,686 –15,686 16,201 –16,201 Outlays (gross), detail: 86.97 Outlays from new permanent authority ......................... Balance Sheet (in millions of dollars) 15,686 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. 16,201 –15,691 –16,174 Net budget authority and outlays: Budget authority ............................................................ ................... Outlays ........................................................................... –160 15 –5 106 27 Status of Direct Loans (in millions of dollars) 1997 actual 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 14,942 15,523 16,026 306 36 308 47 340 50 2,222 2,027 2,066 2,140 –34 –64 –60 –58 2,188 1,963 2,006 2,082 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ 1998 est. 1999 est. 119 132 125 132 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 2,704 2,437 2,486 2,604 34 23 22 23 2,336 2,067 2,080 2,157 35 20 37 21 37 21 37 22 2999 2,425 2,148 2,160 2,239 279 290 326 365 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ Total direct loan obligations ..................................... 14,942 15,523 16,026 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 ............................... 2,222 14,941 –15,098 –39 2,026 15,523 –15,482 –2 2,065 16,026 –15,950 –2 1290 Outstanding, end of year .......................................... 2,026 2,065 2,139 3999 Total net position ................................ 279 290 326 365 4999 1150 Total liabilities and net position ............ 2,704 2,438 2,486 2,604 Note.—Loans to cooperatives include nonaccrual loans and sales contracts. Statement of Changes in Net Worth (in millions of dollars) 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. Statement of Operations (in millions of dollars) 1996 actual 1997 actual 1998 est. 1999 est. 0101 0102 Total interest income .............................. Total interest expense ............................. 200 –137 192 –135 196 –137 212 –149 0109 0111 Net interest income ................................. Other income ........................................... 63 13 57 16 59 13 63 12 1996 actual 1997 actual Beginning balance of net worth ......................... Note.—Direct loan balances exclude nonaccrual loans and sales contracts. Identification code 99–4120–0–3–351 356 41 1999 –15,306 Identification code 99–4120–0–3–351 1997 actual 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 (–) .................... 1699 15,146 1996 actual Identification code 99–4120–0–3–351 1803 89.00 90.00 1173 FARM CREDIT SYSTEM—Continued 246 279 290 326 Capital stock and participations issued ......... Capital stock and participations retired ......... Surplus retired .................................................. Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 11 –8 .................. 44 –14 .................. 6 .................. .................. 6 –1 .................. 5 .................. .................. 47 –16 .................. 7 –3 .................. 49 –14 .................. Ending balance of net worth .............................. 279 290 326 365 Identification code 99–4120–0–3–351 1998 est. 1999 est. Financing Activities (in millions of dollars) Identification code 99–4120–0–3–351 Beginning balance of outstanding system obligation ........................ 1996 actual 1997 actual 1998 est. 1999 est. 2,452 2,364 2,094 2,109 Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net 2,662 2,622 2,600 2,637 –2,603 –147 –2,696 –196 –2,683 98 –2,587 27 Ending balance of outstanding system obligations ................................... 2,364 2,094 2,109 2,186 1174 THE BUDGET FOR FISCAL YEAR 1999 FARM CREDIT SYSTEM—Continued BANKS FOR COOPERATIVES—Continued Object Classification (in millions of dollars) Identification code 99–4120–0–3–351 11.1 23.2 25.2 33.0 43.0 92.0 99.9 Personnel compensation: Personnel compensation and benefits ...................................................................... Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. Total obligations ........................................................ 1997 actual 5 1 3 14,942 135 60 15,146 1998 est. 1999 est. 6 7 1 1 1 ................... 15,523 16,026 137 149 18 18 15,686 16,201 Program and Financing (in millions of dollars) Identification code 99–4130–0–3–351 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 .......................................................... 39 970 14 22 33 69 Status of Direct Loans (in millions of dollars) 1997 actual Identification code 99–4130–0–3–351 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 40,670 48,000 49,000 1150 AGRICULTURAL CREDIT BANKS 1997 actual 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. 1998 est. 41 998 14 23 34 71 1999 est. 45 1,097 16 25 38 78 Total direct loan obligations ..................................... 40,670 48,000 49,000 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 ............................... 14,914 40,668 –40,617 –3 14,961 48,000 –47,246 –5 15,710 49,000 –48,097 –5 1290 Outstanding, end of year .......................................... 14,961 15,710 16,608 Statement of Operations (in millions of dollars) Total operating expenses ...................................... Capital investment: direct loans ................................... 1,147 40,668 1,181 48,000 1,299 49,000 10.00 Total obligations ........................................................ 41,815 49,181 50,299 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 2,796 42,431 3,412 49,071 3,302 50,449 45,227 –41,815 52,483 –49,181 53,751 –50,299 3,412 3,302 1997 actual Total interest income .............................. Total interest expense ............................. 1,317 –1,008 1,268 –970 1,306 –999 1,436 –1,099 0109 0111 0112 Net interest income ................................. Other income ........................................... Other expense .......................................... 309 26 –198 298 23 –178 307 24 –183 337 26 –201 0119 00.91 01.01 1996 actual 0101 0102 Net income .............................................. –172 –155 –159 –175 0191 Total revenues ......................................... 1,343 1,291 1,330 1,462 0192 Total expenses ......................................... –1,206 –1,148 –1,182 –1,300 0199 Net income or loss .................................. 137 143 148 162 Identification code 99–4130–0–3–351 1998 est. 1999 est. 3,452 21.40 23.90 23.95 24.40 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. Balance Sheet (in millions of dollars) New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 523 494 890 41,908 48,577 49,559 70.00 Total new budget authority (gross) .......................... 42,431 49,071 50,449 73.10 73.20 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 41,815 –41,815 49,181 –49,181 50,299 –50,299 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... 41,815 Outlays from permanent balances ................................ ................... 67.15 68.00 87.00 Total outlays (gross) ................................................. 41,815 49,071 50,299 110 ................... 49,181 50,299 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 (–) .................... 1699 1803 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –41,908 –48,577 –49,559 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 523 –93 494 604 890 740 89.00 90.00 Identification code 99–4130–0–3–351 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ 1997 actual 1998 est. 1999 est. 2,915 167 3,452 170 3,250 178 3,350 188 14,914 14,962 15,710 16,608 –208 –228 –233 –245 14,706 14,734 15,477 16,363 139 124 118 129 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 17,927 18,480 19,023 20,030 129 122 126 125 15,946 16,469 16,963 17,853 391 180 362 161 373 166 392 175 2999 16,646 17,114 17,628 18,545 1,281 1,366 1,395 1,485 1999 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, 1996 actual Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 3999 Total net position ................................ 1,281 1,366 1,395 1,485 4999 Total liabilities and net position ............ 17,927 18,480 19,023 20,030 GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM—Continued Outlays (gross), detail: Outlays from new permanent authority ......................... 46,228 41,843 43,518 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –44,902 –40,902 –42,428 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 1,646 1,326 1,353 941 3,252 1,090 Statement of Changes in Net Worth (in millions of dollars) 86.97 1996 actual 1997 actual Beginning balance of net worth ......................... 1,213 1,281 1,365 1,395 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... .................. –38 138 –32 .................. .................. –39 144 –34 13 1 –84 148 –35 .................. 1 –39 163 –35 .................. Ending balance of net worth .............................. 1,281 1,365 1,395 1,485 Identification code 99–4130–0–3–351 1998 est. 1175 1999 est. 89.00 90.00 Status of Direct Loans (in millions of dollars) Financing Activities (in millions of dollars) 1997 actual Identification code 99–4160–0–3–371 1996 actual Identification code 99–4130–0–3–351 Beginning balance of outstanding system obligations ...................... 1997 actual 1998 est. 1999 est. 15,264 15,946 16,469 16,963 Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net 10,663 7,548 8,200 8,300 –7,041 –2,940 –8,420 1,395 –8,106 400 –7,910 500 Ending balance of outstanding system obligations ................................... 15,946 16,469 16,963 17,853 Object Classification (in millions of dollars) 1997 actual Identification code 99–4130–0–3–351 1998 est. 1999 est. Personnel compensation and benefits .......................... Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. 34 5 14 40,668 970 124 35 5 14 48,000 999 128 39 6 16 49,000 1,099 139 99.9 Total obligations ........................................................ 41,815 49,181 50,299 FARM CREDIT BANKS 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 ........................................... 00.05 Losses/gains on property .......................................... 00.06 Other expenses .......................................................... 1997 actual 1998 est. 1999 est. 106 2,482 8 8 –2 185 97 2,607 10 –3 –1 149 101 2,749 8 –4 1 171 00.91 01.01 Total operating expenses ...................................... Capital investment: Direct loans ................................... 2,787 43,441 2,858 38,985 3,026 40,492 10.00 Total obligations ........................................................ 46,228 41,843 43,518 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 7,125 46,548 7,445 42,255 7,857 45,680 53,673 –46,228 49,700 –41,843 53,537 –43,518 7,445 7,857 10,019 21.40 23.90 23.95 24.40 67.15 68.00 70.00 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 43,481 38,358 39,759 1150 Total direct loan obligations ..................................... 43,481 38,358 39,759 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 39,216 43,441 –41,632 41,025 38,985 –37,589 42,421 40,492 –38,982 1290 Outstanding, end of year .......................................... 41,025 42,421 43,931 Note.—Loans outstanding at end of year do not include nonaccrual loans and sales contracts. 12.1 23.2 25.2 33.0 43.0 92.0 Identification code 99–4160–0–3–371 1998 est. New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 1,646 1,353 3,252 44,902 40,902 42,428 Total new budget authority (gross) .......................... 46,548 42,255 45,680 The Agricultural Credit Act of 1987 (1987 Act) required the Federal Land Banks (FLBs) and Federal Intermediate Credit Banks (FICBs) to merge into a Farm Credit Bank (FCB) in each of the 12 Farm Credit districts. The FCBs operate under statutory authority that combines the prior authorities of the FLB and the FICB. No merger occurred in the Jackson district in 1988 because the FLB was in receivership. Pursuant to section 410(e) of the 1987 Act, as amended by the Farm Credit Banks Safety and Soundness Act of 1992, the FICB of Jackson merged with the FCB of Columbia on October 1, 1993. Mergers and consolidations of FCBs across district lines, that began in 1992 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, 1997 provided funds to 31 Federal Land Credit Associations (FLCA), 64 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, 51 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) Change in unpaid obligations: 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 46,228 –46,228 41,843 –41,843 43,518 –43,518 Identification code 99–4160–0–3–371 0101 Total interest income .............................. 1996 actual 1997 actual 3,111 3,207 1998 est. 3,292 1999 est. 3,424 1176 THE BUDGET FOR FISCAL YEAR 1999 FARM CREDIT SYSTEM—Continued Ending balance of outstanding system obligations ................................... FARM CREDIT BANKS—Continued 41,940 43,587 44,940 46,237 Statement of Operations (in millions of dollars)—Continued 1996 actual Identification code 99–4160–0–3–371 1997 actual 1998 est. Object Classification (in millions of dollars) 1999 est. 0102 Total interest expense ............................. –2,356 –2,482 –2,607 –2,749 0109 0111 0112 Net interest income ................................. Other income ........................................... Other expenses ........................................ 755 47 –314 725 53 –304 685 21 –252 675 22 –277 0119 Net income .............................................. –267 –251 –231 –255 0191 Total revenues ......................................... 3,158 3,260 3,313 3,446 0192 Total expenses ......................................... –2,670 –2,786 –2,859 Net income or loss .................................. 488 474 454 1997 actual 1998 est. 1999 est. –3,026 0199 Identification code 99–4160–0–3–371 420 11.1 23.2 25.2 33.0 43.0 92.0 Personnel compensation: Full-time permanent ............. Cost of space occupied and equipment ....................... Other services ................................................................ Investments and loans .................................................. Interest and dividends ................................................... Undistributed expenses .................................................. 88 18 8 43,441 2,482 191 79 19 10 38,985 2,607 143 82 19 8 40,492 2,749 168 99.9 Total obligations ........................................................ 46,228 41,843 43,518 FEDERAL AGRICULTURAL MORTGAGE CORPORATION Balance Sheet (in millions of dollars) 1996 actual Identification code 99–4160–0–3–371 1803 1998 est. 1999 est. Identification code 99–4180–0–3–351 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 Program and Financing (in millions of dollars) 1997 actual 7,487 781 7,627 781 7,714 793 7,651 817 00.01 00.02 10.00 39,198 42,394 43,904 –494 –484 –459 –452 38,704 Value of assets related to direct loans .......................................... Other Federal assets: Property, plant and equipment, net ............................ 40,998 40,514 41,935 43,452 653 613 592 590 Total assets ........................................ LIABILITIES: 2104 Federal liabilities: Resources payable to Treasury ............................................... Non-Federal liabilities: Accounts payable: 2201 Consolidated systemwide and other bank bonds ................................ 2201 Notes payable and other interestbearing liabilities ....................... 2202 Accrued interest payable .................... 47,625 49,535 51,034 2999 239 239 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 12 11 16 15 20 22 23 –7 31 –11 42 –16 16 20 26 New budget authority (gross), detail: Spending authority from offsetting collections (gross): Offsetting collections (cash) ..................................... 11 15 22 Change in unpaid obligations: New obligations ............................................................. Total outlays (gross) ...................................................... 7 –7 11 –11 16 –16 Outlays (gross), detail: Outlays from new permanent authority ......................... 7 11 16 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –11 –15 –22 21.40 23.90 23.95 24.40 43,588 44,942 46,242 73.10 73.20 667 455 821 483 930 485 1,037 501 86.97 43,335 45,131 46,596 48,017 4,290 4,404 4,438 4,494 Total net position ................................ 4,290 4,404 4,438 4,494 4999 Total liabilities and net position ............ 47,625 49,535 51,034 52,511 89.00 90.00 Statement of Changes in Net Worth (in millions of dollars) 1996 actual 1997 actual Beginning balance of net worth ......................... 4,129 4,290 4,414 4,448 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 77 –99 432 –251 2 43 –41 474 –365 13 31 –52 454 –393 –6 29 –36 421 –362 4 Ending balance of net worth .............................. 4,290 4,414 4,448 4,504 Identification code 99–4160–0–3–371 1998 est. 1999 est. Financing Activities (in millions of dollars) Identification code 99–4160–0–3–371 Beginning balance of outstanding system obligations ...................... Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net 1996 actual 1997 actual 1998 est. 1999 est. 38,585 41,940 43,587 44,940 40,400 41,162 43,839 45,358 –38,437 1,392 –39,344 –171 –43,403 917 –44,858 797 13 3 16 237 3999 10 1 11 41,941 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1999 est. 7 68.00 272 Obligations by program activity: Administrative expenses ................................................ 7 Federal Income Taxes .................................................... ................... 1998 est. Total obligations ........................................................ 52,510 1999 1997 actual Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Uninvested ................................................................. Net budget authority and outlays: Budget authority ............................................................ ................... ................... ................... Outlays ........................................................................... –4 –4 –6 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 re- GOVERNMENT-SPONSORED ENTERPRISES quired 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. 1177 FARM CREDIT SYSTEM—Continued 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 of core capital phased in over three years. As of September 30, 1997, Farmer Mac’s total capital exceeds regulatory and statutory requirements. 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) 1997 actual Identification code 99–4180–0–3–351 1998 est. 1999 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 302 528 924 2150 Total guaranteed loan commitments ........................ 302 528 924 2210 2231 2251 Cumulative balance of guaranteed loans outstanding: Outstanding, start of year ............................................. Disbursements of new guaranteed loans ...................... Repayments and prepayments ...................................... 598 302 –86 814 528 –134 1,208 924 –213 2290 Outstanding, end of year .......................................... 814 1,208 1,919 2299 Memorandum: Guaranteed amount of guaranteed loans outstanding, end of year ................................................................ 814 1,208 1,919 Statement of Operations (in millions of dollars) Identification code 99–4180–0–3–351 1996 actual 1997 actual 1998 est. 1999 est. 0101 0101 0101 0101 0102 Revenue: Net Interest Income ................................. Guarantee Fee Income ............................. Gain on Security Issuance ...................... Other Income ........................................... Expense .................................................... 3 1 1 1 –5 6 2 2 .................. –7 7 4 4 .................. –11 7 7 7 1 –16 0109 Net income or loss (–) ............................ 1 3 4 6 0199 Net income or loss .................................. 1 3 4 6 Balance Sheet (in millions of dollars) Identification code 99–4180–0–3–351 ASSETS: Non-Federal assets: 1201 Investment in securities ..................... 1206 Receivables, net .................................. 1207 Advances and prepayments ................ Net value of assets related to direct loans receivable: 1401 Direct loans receivable, gross ............ 1402 Interest receivable .............................. 1499 1801 1999 1996 actual 1997 actual 1998 est. 1999 est. 502 3 1 647 3 2 717 3 2 804 3 2 13 15 461 15 529 15 593 15 Net present value of assets related to direct loans ........................... Other Federal assets: Cash and other monetary assets .................................. 28 476 544 608 69 246 246 246 Total assets ........................................ 603 1,374 1,512 1,663 1178 THE BUDGET FOR FISCAL YEAR 1999 FARM CREDIT SYSTEM—Continued 72.40 72.41 Balance Sheet (in millions of dollars)—Continued Authority to borrow ........................................... U.S. Securities: Par value ..................................... 3,648 1,695 4,107 1,739 4,205 1,791 72.99 73.10 73.20 FEDERAL AGRICULTURAL MORTGAGE CORPORATION—Continued 5,701 61,714 –61,112 6,303 34,918 –34,768 6,453 35,031 –34,878 457 4,107 1,739 457 4,205 1,791 457 4,305 1,844 1996 actual 1997 actual LIABILITIES: Non-Federal liabilities: 2201 Accounts payable ................................ 2202 Interest payable .................................. 2203 Debt ..................................................... 2204 Liabilities for loan guarantees ........... 2 7 546 1 2 8 1,313 1 2 8 1,426 1 2 8 1,571 1 74.40 74.40 74.41 Total unpaid obligations, start of year ................ New obligations ............................................................. Total outlays (gross) ...................................................... Unpaid obligations, end of year: Obligated balance: Uninvested: Uninvested ........................................................ Authority to borrow ........................................... U.S. Securities: Par value ..................................... 2999 556 1,324 1,437 1,582 74.99 Total unpaid obligations, end of year .................. 6,303 6,453 6,606 47 50 75 81 86.97 Outlays (gross), detail: Outlays from new permanent authority ......................... 61,112 34,768 34,878 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Collections from non-Federal sources .............................................. –21,445 –19,846 –19,880 Net budget authority and outlays: Budget authority ............................................................ Outlays ........................................................................... 40,650 39,667 15,165 14,922 15,247 14,998 Identification code 99–4180–0–3–351 Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1998 est. 1999 est. 3999 Total net position ................................ 47 50 75 81 4999 Total liabilities and net position ............ 603 1,374 1,512 1,663 Object Classification (in millions of dollars) Identification code 99–4180–0–3–351 11.1 25.2 92.0 99.9 1997 actual 1998 est. Personnel compensation: Personnel compensation and benefits ...................................................................... 3 Other services ................................................................ 4 Undistributed ................................................................. ................... Total obligations ........................................................ 7 1999 est. 5 5 1 6 7 3 11 16 89.00 90.00 Status of Direct Loans (in millions of dollars) Identification code 99–4200–0–3–371 FEDERAL HOME LOAN BANKS 1150 Total direct loan obligations ..................................... 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 1290 Outstanding, end of year .......................................... Program and Financing (in millions of dollars) 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 1997 actual 1998 est. 1999 est. 237 131 237 131 237 131 14,585 14,486 14,486 846 300 638 846 300 638 846 300 638 16,737 16,638 16,638 01.01 01.04 01.05 01.06 Total operating expenses ...................................... Capital investment: Investment in bank premises ................................... Net increase in advances ......................................... Net increase in investments ..................................... Repurchase of capital stock ..................................... 11 28,526 13,856 2,584 11 10,910 4,760 2,600 11 11,564 4,219 2,600 01.91 Total capital investment ....................................... 44,978 18,281 18,394 10.00 Total obligations ........................................................ 61,714 34,918 35,031 Budgetary resources available for obligation: Unobligated balance available, start of year: Authority to borrow ................................................................... ................... 22.00 New budget authority (gross) ........................................ 62,095 381 35,011 473 35,127 62,095 –61,714 35,392 –34,918 35,600 –35,031 381 473 568 40,650 15,165 15,247 21.40 23.90 23.95 24.40 Total budgetary resources available for obligation New obligations ............................................................. Unobligated balance available, end of year: Authority to borrow ................................................................... 1998 est. 1999 est. Position with respect to appropriations act limitation on obligations: 1111 Limitation on direct loans ............................................. ................... ................... ................... 1131 Direct loan obligations exempt from limitation ............ 980,417 1,039,240 1,101,600 FEDERAL HOME LOAN BANK SYSTEM Identification code 99–4200–0–3–371 1997 actual 67.15 68.00 New budget authority (gross), detail: Authority to borrow (indefinite) ..................................... Spending authority from offsetting collections: Offsetting collections (cash) .............................................. 21,445 19,846 19,880 70.00 Total new budget authority (gross) .......................... 62,095 35,011 35,127 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Uninvested: 72.40 Uninvested ........................................................ 358 457 457 980,417 1,039,240 1,101,600 153,302 181,828 192,738 980,417 1,039,240 1,101,600 –951,891 –1,028,330 –1,090,036 181,828 192,738 204,302 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 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 6,418 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, Guam, American Samoa, and the Northern Mariana Islands. Advances outstanding on September 30, 1997 totaled approximately $181.8 billion, a net increase of approximately $28.5 billion from the September 30, 1996 level of $153.3 billion. The principal source of funds for the lending operation is the sale of consolidated obligations to the public. On September 30, 1997, $284.5 billion of these obligations were outstanding. The consolidated obligations are not guaranteed by the U.S. Government as to principal or interest. Other sources GOVERNMENT-SPONSORED ENTERPRISES of lendable funds include members’ deposits and capital. Deposits totaled $15.3 billion and total capital amounted to $18.4 billion as of September 30, 1997. 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 1998 and 1999 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 1996 actual 1997 actual 1998 est. 1999 est. 0101 0102 Revenue ................................................... Expense (excludes payments to REFCORP) ............................................ 15,712 17,286 17,184 17,184 –14,364 –15,799 –15,699 –15,699 0109 Net income .............................................. 1,348 1,487 1,485 1,485 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 1996 actual 1997 actual 1998 est. 1999 est. 1,695 1,739 1,791 1,844 121,996 3,883 135,852 4,604 140,612 4,742 144,831 4,884 153,302 181,828 192,738 204,302 358 156 339 457 149 304 457 149 304 457 149 304 281,728 324,933 340,793 388 439 440 440 Object Classification (in millions of dollars) 234 4,259 243,533 205 4,970 284,545 205 5,119 299,710 205 5,272 314,957 16,038 820 15,676 689 15,676 689 15,676 689 2999 265,272 306,524 321,839 337,239 16,456 18,408 18,954 19,532 11.1 12.1 21.0 23.3 24.0 25.2 31.0 32.0 43.0 43.0 92.0 Personnel compensation: Full-time permanent ............. Civilian personnel benefits ............................................ Travel and transportation of persons ............................ Communications, utilities, and other rent .................... Printing and reproduction .............................................. Other services ................................................................ Equipment ...................................................................... Land and structures ...................................................... Investments and loans: Net increase in advances ......................................... Net increase in investments ..................................... Subsidies (Affordable Housing Program) ...................... Interest and dividends: Interest and cash dividends ..................................... REFCORP interest ...................................................... Repurchase of capital stock (gross) ............................. 99.9 Total obligations ........................................................ 33.0 33.0 41.0 Total net position ................................ 16,456 18,408 18,954 19,532 4999 Total liabilities and net position ............ 281,728 324,933 340,793 356,771 1998 est. 1999 est. 100 22 6 16 7 86 7 4 100 22 6 16 7 86 7 4 100 22 6 16 7 86 7 4 28,526 13,856 131 10,910 4,760 131 11,564 4,219 131 16,069 300 2,584 15,969 300 2,600 15,969 300 2,600 61,714 34,918 35,031 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 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) 1996 actual 1997 actual 0101 0102 Revenue ................................................... Expense .................................................... 906 –795 915 –795 926 –795 938 –795 0109 Net income .............................................. 111 120 131 143 Identification code 99–4033–0–3–373 1998 est. 1999 est. Balance Sheet (in millions of dollars) Identification code 99–4033–0–3–373 3999 1997 actual Identification code 99–4200–0–3–371 356,771 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 ............................................... Total liabilities .................................... NET POSITION: 3200 Invested capital ....................................... 1179 FEDERAL HOME LOAN BANK SYSTEM—Continued ASSETS: Investments in US securities: 1102 Federal assets: Segregated accounts investment, net .............................. Other Federal assets: 1801 Cash, cash equivalents, and interest receivable ....................................... 1996 actual 1997 actual 1998 est. 1999 est. 1,355 1,475 1,606 1,749 281 266 266 266 1180 THE BUDGET FOR FISCAL YEAR 1999 FEDERAL HOME LOAN BANK SYSTEM—Continued FINANCING CORPORATION—Continued Balance Sheet (in millions of dollars) Balance Sheet (in millions of dollars)—Continued 1996 actual 1997 actual Other assets ........................................ 12 12 11 11 Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Interest payable .................................. 2203 Debt ..................................................... 2207 Other ................................................... 1,648 1,753 1,883 2,026 236 8,142 85 236 8,144 69 236 8,145 67 236 8,146 65 2999 8,463 8,449 8,448 8,447 Identification code 99–4033–0–3–373 1901 1999 1996 actual 1997 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 ........ 3,856 4,168 4,504 4,868 888 1 888 .................. 881 .................. 881 .................. 1999 Identification code 99–4029–0–3–373 1998 est. 1999 est. 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 –603 675 –7,568 –603 796 –7,568 –603 927 –7,568 –603 1,069 3999 Total net position ................................ –6,816 –6,695 –6,564 –6,422 4999 Total liabilities and net position ............ 1,647 1,754 1,884 2,025 1998 est. 1999 est. Total assets ........................................ LIABILITIES: Non-Federal liabilities: 2202 Accrued interest payable on longterm obligations ............................. 2203 Debt ..................................................... 4,745 5,056 5,385 5,749 888 30,074 888 30,072 881 30,069 881 30,067 2999 30,962 30,960 30,950 30,948 2,513 2,513 2,513 2,513 –31,286 –31,286 –31,286 –31,286 1,057 1,499 1,057 1,813 1,057 2,152 1,057 2,519 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 ............ 3999 Total net position ................................ –26,217 –25,903 –25,564 –25,197 4999 Total liabilities and net position ............ 4,745 5,057 5,386 5,751 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 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. 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. Statement of Operations (in millions of dollars) Identification code 99–4029–0–3–373 1996 actual 1997 actual 1998 est. 1999 est. 0101 0102 Revenue ................................................... Expense .................................................... 2,925 –2,633 2,940 –2,626 2,967 –2,626 2,995 –2,626 0109 Net income .............................................. 292 314 341 369 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Program and Financing (in millions of dollars) Identification code 99–4450–0–3–803 1996 actual 1997 est. 1998 est. 09.01 09.02 09.03 09.04 Obligations by program activity: Monetary and economic policy ...................................... Services to financial institutions and the public ......... Supervision and regulation of financial institutions System policy direction and oversight .......................... 73 4 66 32 74 4 67 33 81 4 71 35 09.09 09.10 Subtotal: Board operating expenses ......................... Office of Inspector General operating expenses ........... 175 3 178 3 191 3 10.00 Total obligations ........................................................ 178 181 194 Budgetary resources available for obligation: Unobligated balance available, start of year: Uninvested ................................................................. 22.00 New budget authority (gross) ........................................ 21.40 –2 ................... ................... 180 181 194 23.90 23.95 Total budgetary resources available for obligation New obligations ............................................................. 178 –178 181 –181 194 –194 68.00 New budget authority (gross), detail: Spending authority from offsetting collections (gross): Offsetting collections (cash) ..................................... 180 181 194 18 178 –170 26 181 –181 26 194 –194 26 26 26 Change in unpaid obligations: Unpaid obligations, start of year: Obligated balance: Uninvested ................................................................. 73.10 New obligations ............................................................. 73.20 Total outlays (gross) ...................................................... 74.40 Unpaid obligations, end of year: Obligated balance: Uninvested ................................................................. 72.40 86.97 86.98 Outlays (gross), detail: Outlays from new permanent authority ......................... Outlays from permanent balances ................................ 155 15 165 16 179 15 87.00 Total outlays (gross) ................................................. 170 181 194 Offsets: Against gross budget authority and outlays: 88.40 Offsetting collections (cash) from: Non-Federal sources .................................................................. –180 –181 –194 GOVERNMENT-SPONSORED ENTERPRISES 89.00 90.00 Net budget authority and outlays: Budget authority ............................................................ ................... ................... ................... Outlays ........................................................................... –10 ................... ................... 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 Federal Reserve notes are not included, since they are reimbursed in full by the Federal Reserve banks. 1181 BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM—Continued Balance Sheet (in millions of dollars) Identification code 99–4450–0–3–803 1996 actual 1997 est. 1998 est. ASSETS: Non-Federal assets: Receivables, net ........................... Other Federal assets: 1801 Cash in bank ............................................................. 1803 Property, plant and equipment, net .......................... 5 7 7 16 121 15 123 15 123 1999 142 145 145 26 20 26 21 26 21 46 47 47 121 –25 123 –25 123 –25 1206 Total assets ............................................................... LIABILITIES: Non-Federal liabilities: 2201 Accounts payable and accrued liabilities ................. 2206 Pension and other actuarial liabilities ..................... 2999 Total liabilities .......................................................... NET POSITION: 3200 Invested capital ............................................................. 3300 Cumulative results of operations .................................. 3999 Total net position ...................................................... 96 98 98 4999 Total liabilities and net position ................................... 142 145 145 Object Classification (in millions of dollars) Identification code 99–4450–0–3–803 11.1 11.3 11.5 Reimbursable obligations: Personnel compensation: Full-time permanent ............................................. Other than full-time permanent ........................... Other personnel compensation ............................. 1996 actual 1997 est. 1998 est. 100 2 2 102 2 2 106 2 2 104 17 5 106 18 5 110 16 5 24.0 25.1 25.2 26.0 31.0 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 ................................................................. 10 3 3 16 6 11 10 3 2 16 6 12 10 3 2 22 8 15 99.0 25.2 Subtotal, reimbursable obligations ...................... Allocation Account: Other services ................................ 175 3 178 3 191 3 99.9 Total obligations ........................................................ 178 181 194 11.9 12.1 21.0 23.3
@FedFRASER