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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 for public policy purposes. They are not included in the Federal budget because they are private companies. However, because of their public purpose, detailed statements of financial operations and condition are presented, to the extent such information is available, on a basis that is as consistent as practicable with the basis for the budget data of Government agencies. These statements are not reviewed by the President; they are presented as submitted by the enterprises. —The Student Loan Marketing Association is a for-profit financial corporation chartered by Congress in 1972 under the Higher Education Act (HEA) to help increase the availability of student loans. Sallie Mae carries out secondary market and other functions. —The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation provide assistance to the secondary market for residential mortgages. 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. —Institutions of the Farm Credit System the 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. STUDENT LOAN MARKETING ASSOCIATION STUDENT LOAN MARKETING ASSOCIATION 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 was privatized in 1997 pursuant to the authority granted by the Student Loan Marketing Association Reorganization Act of 1996. The GSE is a wholly owned subsidiary of SLM Holding Corporation and must wind down and be liquidated by September 30, 2008. Under legislation passed in 1998, if SLM Holding Corporation affiliates with a depository institution, the GSE must wind down within two years (unless such period is extended by the Department of the Treasury). The GSE 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, the GSE is authorized, at the request of Federal officials, to make insured loans directly to students. The GSE is authorized to advance funds to State agencies that will provide loans to students. The GSE 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. The GSE 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. Generally, under the privatization legislation, the GSE cannot engage in any new business activities or acquire any additional program assets other than purchasing student loans and serving, at the request of the Secretary of Education, as a lender-of-last-resort. The GSE can continue to make warehousing advances under contractual commitments existing on August 7, 1997. 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. The 1999 loan volume amounts reflect the purchase of the Nellie Mae Corporation, including its $2.6 billion student loan portfolio. Status of Direct Loans (in millions of dollars) 1999 actual 99–1500 ANNUAL LOAN ACTIVITY 2000 est. 2001 est. 1131 Direct loan obligations .................................................. 14,023 5,989 9,146 1150 Total direct loan obligations ......................................... 14,023 5,989 9,146 29,468 14,023 37,797 8,989 33,870 9,146 ¥3,986 ¥1,971 263 ¥4,125 ¥9,000 209 ¥3,364 ¥12,000 188 37,797 33,870 27,840 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 or discounted ........ 1264 Write-offs for default: Other adjustments, net ............. 1210 1231 1290 Outstanding, end of year .......................................... The Student Loan Marketing Association (Sallie Mae) was created as a shareholder-owned government sponsored enterprise (GSE) by the Education Amendments of 1972 to expand [In millions of dollars] Guaranteed student loans: Stafford: Purchased ........................................................................... Warehoused ........................................................................ PLUS/SLS: Purchased .............................................................. Consolidations ......................................................................... Health professions loans; Purchased ..................................... 1999 actual Subtotal, Guaranteed student loans ............................. Other ............................................................................................ 13,528 495 8,669 320 8,814 332 Total ............................................................................... 14,023 8,989 9,146 2000 est. 2001 est. 10,716 7,043 7,292 713 300 150 1,121 732 758 909 594 614 69 .................... .................... Financing.—The GSE is financed by borrowing in the private debt markets and securitizing its assets. 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 adjust1251 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00001 Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV 1252 THE BUDGET FOR FISCAL YEAR 2001 STUDENT LOAN MARKETING ASSOCIATION—Continued STUDENT LOAN MARKETING ASSOCIATION—Continued able rate cumulative preferred stock is required to be redeemed prior to such date. The financial data contained in this material relating to future periods represents estimates that have been prepared specifically for inclusion in the President’s Budget. These data should not be viewed as official forecasts 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. Statement of Operations (in millions of dollars) 99–1500 1998 actual 1999 actual 2000 est. 2001 est. 0101 0102 Revenue ................................................... Expense .................................................... 3,116 –2,595 2,854 –2,391 .................. .................. .................. .................. 0105 Net income or loss (–) ............................ 521 463 .................. .................. Balance Sheet (in millions of dollars) 1998 actual 1999 actual 2000 est. 2001 est. 1,404 .................. 669 2,728 706 15 1,401 .................. 942 2,009 684 16 1,429 .................. 848 1,543 616 17 1,458 .................. 678 864 431 18 29,586 37,947 34,005 27,951 –118 –150 –135 –111 29,468 50 182 358 37,797 38 172 435 33,870 40 180 457 27,840 42 189 480 Total assets ........................................ LIABILITIES: 2202 Interest payable ....................................... 2203 Debt ......................................................... 2207 Other ........................................................ 35,580 43,494 39,000 32,000 300 33,517 883 293 41,591 677 264 37,125 711 238 30,215 747 2999 34,700 42,561 38,100 31,200 99–1500 ASSETS: Investments in US securities: 1102 Treasury securities, par ...................... 1104 Agency securities, par ........................ 1106 Receivables, net .................................. 1201 Investments in other securities, net ....... 1206 Receivables, net ...................................... 1207 Advances and prepayments .................... Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 1801 1803 1901 Value of assets related to direct loans .......................................... Cash and other monetary assets ............ Property, plant and equipment, net ........ Other assets ............................................ 1999 f Total liabilities .................................... NET POSITION: 3300 Invested Capital ...................................... 880 933 900 800 3999 Total net position ................................ 880 933 900 800 4999 Total liabilities and net position ............ 35,580 43,494 39,000 32,000 FEDERAL NATIONAL MORTGAGE ASSOCIATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 1999 actual 99–2500 2000 est. 2001 est. 1131 Direct loan obligations .................................................. 201,660 133,917 152,021 1150 Total direct loan obligations ......................................... 201,660 133,917 152,021 393,210 518,629 599,719 208,542 132,281 151,144 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: 1231 Direct loan disbursements ........................................ 1210 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00002 1232 1251 1264 Purchase of loans assets .......................................... Repayments: Repayments and prepayments ................. Write-offs for default: Other adjustments, net ............. 1290 Outstanding, end of year .......................................... 19,258 335 362 ¥100,348 ¥51,525 ¥59,117 ¥2,033 ................... ................... 518,629 599,719 692,108 The Federal National Mortgage Association (Fannie Mae) is a federally-chartered, privately-owned company with a public mission to provide stability and to 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, Fannie Mae engages primarily in two forms of business: investing in portfolios of residential mortgages and guaranteeing residential mortgage securities. As of September 30, 1999, Fannie Mae held a net mortgage portfolio totaling $504 billion and had net outstanding guaranteed mortgage-backed securities of over $670 billion. Through a federal charter, Congress has equipped Fannie Mae with certain attributes to help it carry out its public mission. These include an exemption from state and local taxes (except real property taxes), an exemption of its debt and mortgage securities from Securities and Exchange Commission registration requirements, and conditional access to a $2.25 billion line of credit from the U.S. Treasury. 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, is 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.’’ In December 1995, the U.S. Department of Housing and Urban Development (HUD) set affordable housing goals for 1996–1999 and established 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 low- and moderate-income goal is 42 percent; the geographically targeted goal is 24 percent and the special affordable housing goal is 14 percent. Fannie Mae exceeded all of the housing goals in 1998 with low- and moderate- Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES income purchases at 44.1 percent, geographically targeted purchases at 27 percent, and special affordable housing purchases at 14.3 percent. HUD is publishing a proposed rule for public comment that would set new affordable housing goals for the period covering 2000 to 2003. After a transition period, the goals would be 50 percent for the low- and moderate-income goal, 31 percent for the geographically targeted goal, and 20 percent for the special affordable housing goal. 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 1999 was $17.9 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. Through the third quarter of 1999, Fannie Mae earned $2.87 billion. Income and retained earnings for the years ended September 30, 1998 and 1999 follow (in thousands of dollars): 1603 1699 1801 1803 2999 440,247 534,477 619,799 713,264 15,065 –213 17,674 –619 20,730 –909 24,170 –1,730 Total liabilities .................................... NET POSITION: Cumulative results of operations: 3300 Cumulative results of operations ....... 3300 Change in Stockholder Equity ............ Total net position ................................ 14,852 17,055 19,821 22,440 4999 Total liabilities and net position ............ 455,099 551,532 639,620 735,704 MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 297,503 208,781 228,595 1150 Total direct loan obligations ......................................... 297,503 208,781 228,595 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 798,460 348,792 ¥208,768 938,484 208,781 ¥113,290 1,033,975 228,595 ¥122,309 Outstanding, end of year .......................................... 938,484 1,033,975 1,140,261 15,064,600 17,674,100 34 36,498 .................. 44,772 .................. 48,800 362,478 13,854 477,130 27,367 580,250 4,164 670,984 4,081 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00003 2001 est. Direct loan obligations .................................................. Retained earnings, end of year ............................................................ 123 68,714 2000 est. 1131 3,686,000 15,064,600 (1,076,500) .................. 1999 actual 99–2501 3,259,100 12,766,100 (960,600) .................. f 3999 Net income ............................................................................................ Retained earnings, beginning of year ........................................................... Dividends on common stock .......................................................................... 4 674,875 12,029 .................. .................. 8,341 .................. 702,060 2,863 .................. .................. 1290 19 584,226 10,622 .................. .................. 7,198 .................. 609,566 3,035 .................. .................. 4,966,300 1,280,300 ASSETS: Fund balances ......................................... 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 Direct loans (net of discount) ............ 1602 Federal Agencies ................................. 504,303 10,513 180 254 6,574 11 524,879 2,311 288 160 4,624,900 1,365,800 1101 376,078 9,974 191 400 5,544 8 430,582 3,135 225 353 Income before Federal income tax ....................................................... Federal income tax ........................................................................................ 2001 est. Value of assets related to direct loans .......................................... Cash and other monetary assets ............ Property, plant and equipment, net ........ 735,704 35,255,700 30,289,400 2000 est. –190 639,620 30,510,100 25,885,200 1999 actual –188 551,532 Gross revenue ................................................................................................ Gross expenses .............................................................................................. 1998 actual –194 455,099 1210 1231 1251 Balance Sheet (in millions of dollars) –254 Total assets ........................................ LIABILITIES: 2101 Accounts payable .................................... 2102 Accrued interest payable ......................... 2105 Other ........................................................ 2203 Debt ......................................................... 2204 Estimated liability for loan guarantees 2206 Pension and other actuarial liabilities 2207 Subtotal, Federal taxes payable .............. 1999 actual 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. Allowance for estimated uncollectible loans and interest (–) .................... 1999 1998 actual 99–2500 1253 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued 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 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. Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV 1254 THE BUDGET FOR FISCAL YEAR 2001 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued PORTFOLIO PROGRAMS—Continued MORTGAGE-BACKED SECURITIES—Continued Balance Sheet (in millions of dollars) 99–2501 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 (–) .................... 1699 1998 actual 1999 actual 2000 est. 2001 est. 799,006 939,092 1,034,576 1,140,862 –546 –608 –601 –600 798,460 f Value of assets related to direct loans .......................................... 938,484 1,033,975 1,140,261 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... 798,460 938,484 1,033,975 1,140,261 798,460 938,484 1,033,975 1,140,261 2999 798,460 938,484 1,033,975 1,140,261 1999 Total liabilities .................................... FEDERAL HOME LOAN MORTGAGE CORPORATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 1999 actual 99–4420 2000 est. 2001 est. 1131 Direct loan obligations .................................................. 156,862 69,700 77,500 1150 Total direct loan obligations ......................................... 156,862 69,700 77,500 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 216,522 156,862 ¥57,416 315,968 69,700 ¥29,857 355,811 77,500 ¥37,492 1290 Outstanding, end of year .......................................... 315,968 355,811 395,819 The 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. As of September 30, 1999, Freddie Mac held a mortgage portfolio totaling $315 billion and had outstanding guaranteed mortgagebacked securities of $739 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 conditional access to a $2.25 billion line of credit from the U.S. Treasury. 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 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00004 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. In December 1995, the U.S. Department of Housing and Urban Development (HUD) affordable housing goals for 1996–1999 and established 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, 42 percent meet the low- and moderate-income goal, 24 percent meet the geographically targeted goal, and 14 percent meet the special affordable goal. Freddie Mac exceeded all of the housing goals in 1998 with low- and moderate-income purchases of 42.9 percent, geographically targeted purchases of 26.1 percent, special affordable purchases of 15.9 percent, and the multifamily portion of the special affordable purchases of $2.7 billion in qualifying multifamily mortgages. HUD is publishing a proposed rule for public comment that would set new affordable housing goals for the period covering 2000 to 2003. After a transition period, the goals would be 50 percent for the low- and moderate-income goal, 31 percent for the geographically targeted goal, and 20 percent for the special affordable housing goal. 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 simulta- Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM neous adverse credit and interest rate stresses over a 10year period, plus an additional amount to cover management and operations risk. Through the third quarter of 1999, Freddie Mac recorded net income of $1.63 billion. 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) 1998 actual 1999 actual 30,825 12,271 255 26,515 18,643 487 48,265 18,532 507 49,965 18,413 507 216,522 –294 315,968 –467 355,811 –742 395,819 –1,179 216,228 1,286 1,153 1,238 315,501 1,992 1,251 496 355,069 2,000 1,384 1,351 394,640 2,000 1,571 1,856 Total assets ........................................ LIABILITIES: 2101 Accounts payable .................................... 2201 Accounts payable .................................... 2202 Interest payable ....................................... 2203 Debt ......................................................... 2206 Pension and other actuarial liabilities Other: 2207 Accrued payroll and benefits .............. 2207 Accrued annual leave (funded or unfunded) ........................................... 2207 Other Liabilities .................................. 263,256 364,885 427,108 468,952 1 804 1,543 236,387 13 115 2,146 2,311 341,014 19 .................. 3,002 3,373 403,441 28 .................. 2,951 4,366 442,529 41 62 82 108 142 1 15,157 2 8,056 4 4,117 8 4,266 2999 253,968 353,745 414,073 454,303 99–4420 ASSETS: Investments in other securities, net ....... Receivables, net ...................................... Advances and prepayments .................... Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Retained mortgage inventory .............. 1603 Allowances (–) .................................... 1201 1206 1207 1699 1801 1803 1901 Value of assets related to direct loans .......................................... Cash and other monetary assets ............ Property, plant and equipment, net ........ Other assets ............................................ 1999 Total liabilities .................................... NET POSITION: 3100 Invested capital ....................................... 2000 est. 2001 est. 9,288 11,140 13,035 14,649 3999 Total net position ................................ 9,288 11,140 13,035 14,649 4999 Total liabilities and net position ............ 263,256 364,885 427,108 468,952 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00005 1255 MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 1999 actual 99–4440 2000 est. 2001 est. 1131 Direct loan obligations .................................................. 270,798 162,000 188,900 1150 Total direct loan obligations ......................................... 270,798 162,000 188,900 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 490,687 270,798 ¥232,272 529,213 162,000 ¥74,381 616,832 188,900 ¥87,360 1290 Outstanding, end of year .......................................... 529,213 616,832 718,372 Balance Sheet (in millions of dollars) 99–4440 1901 f 1998 actual 1999 actual 490,687 ASSETS: Underlying Mortgages .............................. 2000 est. 2001 est. 529,231 616,832 718,372 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... 490,687 529,231 616,832 718,372 490,687 529,213 616,832 718,372 2999 490,687 529,213 616,832 718,372 1999 Total liabilities .................................... FARM CREDIT SYSTEM The Farm Credit System is a government sponsored enterprise that provides privately financed credit to agricultural and rural communities. The major functional entities of the system are: (1) Agricultural Credit Bank (ACB), (2) Farm Credit Banks (FCB), and (3) 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). f AGRICULTURAL CREDIT BANK On July 1, 1999, the remaining cooperative entity, the St. Paul Bank for Cooperatives, merged into 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 Bank for Cooperatives (BC). In exercising its FCB authority, CoBank ACB’s charter limits its lending to ACAs located in the region previously served by the Farm Credit Bank of Springfield. As an entity lending to Cooperatives, CoBank is independently chartered to provide credit and related services nationwide to eligible cooperatives primarily engaged in farm supply, grain, marketing and proc- Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV 1256 THE BUDGET FOR FISCAL YEAR 2001 FARM CREDIT SYSTEM—Continued AGRICULTURAL CREDIT BANK—Continued essing (including sugar and dairy). CoBank also makes loans to rural utilities, including telecommunications companies and it provides international loans for the financing of agricultural exports. Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 40 191 –48 5 80 84 –27 (19) 90 179 –40 0 65 204 –40 0 Ending balance of net worth .............................. 1,697 1,660 1,714 1,818 Financing Activities (in millions of dollars) Status of Direct Loans (in millions of dollars) 1999 actual 99–4130 2000 est. 99–4130 2001 est. 1131 Direct loan obligations .................................................. 49,522 50,000 50,000 1150 Total direct loan obligations ......................................... 49,522 50,000 50,000 Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 1231 Disbursements: Direct loan disbursements ................... 1251 Repayments: Repayments and prepayments ................. 1263 Write-offs for default: Direct loans ............................... 1290 Outstanding, end of year .......................................... 16,612 49,503 ¥47,884 ¥138 18,093 50,000 ¥49,532 ¥16 18,545 50,000 ¥48,808 ¥16 18,093 18,545 19,721 1998 actual 1999 actual 2000 est. 1999 actual 18,573 18,079 19,468 19,954 f 2000 est. 2001 est. Consolidated systemwide and other bank bonds issued ................................................ Consolidated systemwide and other bank bonds retired ................................................ Consolidated systemwide notes, net ................ 9,686 11,875 12,000 12,000 11,073 893 9,657 –829 11,913 400 11,235 500 Ending balance of outstanding system obligations ............................................................. 18,079 19,468 19,954 21,220 Statement of Operations (in millions of dollars) 99–4130 1998 actual Beginning balance of outstanding system obligations ......................................................... FARM CREDIT BANKS 2001 est. 0101 0102 Total interest income .............................. Total interest expense ............................. 1,460 –1,103 1,424 –1,063 1,493 –1,116 1,592 –1,191 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expense .......................................... 357 35 –201 361 46 –323 377 49 –246 401 52 –249 0115 Net income or loss (–) ............................ –166 –277 –197 –197 0191 Total revenues ......................................... 1,495 1,470 1,542 1,644 0192 Total expenses ......................................... –1,304 –1,386 –1,362 –1,440 0195 Total income or loss (–) ......................... 191 84 180 204 0199 Total comprehensive income ................... 191 84 180 204 Status of Direct Loans (in millions of dollars) 1999 actual 99–4160 2000 est. 2001 est. 1131 Direct loan obligations .................................................. 38,051 40,530 39,957 1150 Total direct loan obligations ......................................... 38,051 40,530 39,957 1210 1231 1251 1264 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. Write-offs for default: Other adjustments, net ............. 1290 Outstanding, end of year .......................................... 44,061 45,823 46,966 38,015 40,483 39,402 ¥36,182 ¥39,340 ¥37,429 ¥71 ................... ................... 45,823 46,966 48,939 Note.—Loans outstanding at end of year do not include nonaccrual loans and sales contracts. Balance Sheet (in millions of dollars) 1998 actual 1999 actual 3,892 190 3,755 182 3,848 187 4,093 198 16,612 18,093 18,545 19,721 –294 –314 –322 –342 16,318 204 17,779 159 18,223 178 19,379 178 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... Accounts payable: 2201 Consolidated systemwide and other bank bonds ..................................... 2201 Notes payable and other interestbearing liabilities ........................... 2202 Accrued interest payable ......................... 20,604 21,875 22,436 23,848 206 167 174 178 18,079 19,468 19,954 21,220 437 186 351 228 360 234 383 248 2999 18,908 20,214 20,722 22,029 1,697 1,660 1,714 1,818 99–4130 ASSETS: Cash and investment securities ............. 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 (–) .................... 1201 1206 1699 1803 Value of assets related to direct loans .......................................... Property, plant and equipment, net ........ 1999 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 2000 est. 2001 est. 3999 Total net position ................................ 1,697 1,660 1,714 1,818 4999 Total liabilities and net position ............ 20,605 21,874 22,436 23,847 Statement of Changes in Net Worth (in millions of dollars) 1998 actual 1999 actual Beginning balance of net worth ......................... 1,582 1,697 1,660 1,714 Capital stock and participations issued ......... 7 5 5 5 99–4130 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 2000 est. PO 00000 2001 est. Frm 00006 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, Sacramento, California; 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, 1999 provided funds to 50 Federal Land Credit Associations (FLCA), 60 Production Credit Associations (PCAs), and 49 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 October 1, 1999, 18 Federal Land Bank Associations originated and serviced long-term real estate loans for 2 of the 6 FCBs. 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 asso- Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES ciations 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. Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net Ending balance of outstanding system obligations ................................... Statement of Operations (in millions of dollars) 99–4160 1998 actual 1999 actual 2000 est. 2001 est. 0101 0102 Total interest income .............................. Total interest expense ............................. 3,348 –2,652 3,317 –2,662 3,413 –2,885 3,562 –3,085 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expenses ........................................ 696 55 –279 655 59 –325 528 41 –251 477 43 –244 0115 Net income or loss (–) ............................ –224 –266 –210 –201 0191 Total revenues ......................................... 3,403 3,376 3,454 3,605 0192 Total expenses ......................................... –2,931 –2,987 –3,136 –3,329 0195 Total income or loss (–) ......................... 472 389 318 276 0199 Total comprehensive income ................... 472 389 318 276 Balance Sheet (in millions of dollars) 1998 actual 1999 actual 8,727 809 9,590 790 9,554 698 9,636 703 44,061 45,823 46,967 48,984 –446 –358 –254 –244 43,615 629 45,465 336 46,713 332 48,740 334 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... Accounts payable: 2201 Consolidated systemwide and other bank bonds ..................................... 2201 Notes payable and other interestbearing liabilities ........................... 2202 Accrued interest payable ......................... 53,780 56,181 57,297 59,413 196 222 248 249 47,714 50,087 51,905 54,074 901 502 902 547 324 534 192 548 2999 49,313 51,758 53,011 55,063 99–4160 ASSETS: 1201 Cash and investment securities ............. 1206 Accrued Interest Receivable .................... Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 1803 Value of assets related to direct loans .......................................... Property, plant and equipment, net ........ 1999 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 2000 est. 2001 est. 4,467 4,423 4,285 4,350 3999 Total net position ................................ 4,467 4,423 4,285 4,350 4999 Total liabilities and net position ............ 53,780 56,181 57,296 59,413 Statement of Changes in Net Worth (in millions of dollars) 1998 actual 1999 actual Beginning balance of net worth ......................... 4,404 4,467 4,423 4,285 Capital stock and participations issued ......... Capital stock and participations retired ......... Surplus Retired ................................................. Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 67 87 .................. 472 (383) –7 68 124 .................. 389 (342) –35 92 184 85 318 (267) –12 36 18 .................. 276 (230) .................. Ending balance of net worth .............................. 4,467 4,423 4,285 4,350 99–4160 2000 est. 2001 est. Financing Activities (in millions of dollars) 1998 actual 99–4160 1999 actual 2000 est. 2001 est. Beginning balance of outstanding system obligations ...................... 43,588 47,714 50,087 53,646 Consolidated systemwide and other bank bonds issued ....................... 51,216 43,119 44,444 45,020 VerDate 04-JAN-2000 22:08 Jan 28, 2000 f FARM CREDIT SYSTEM—Continued Jkt 186484 PO 00000 Frm 00007 1257 48,689 1,599 39,878 –868 38,882 –2,003 41,175 34 47,714 50,087 53,646 57,524 FEDERAL AGRICULTURAL MORTGAGE CORPORATION 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. The Farmer Mac title of the Act was amended by the 1990 farm bill to authorize Farmer Mac to purchase, pool, and securitize the guaranteed portions of farmer program, rural business and community development loans guaranteed by the USDA. The Farmer Mac title was further amended in 1991 to clarify Farmer Mac’s authority to issue debt obligations, provide for the establishment of minimum capital standards, and establish the Office of Secondary Market Oversight at the Farm Credit Administration (FCA) and expand the agency’s rulemaking authority. Most recently, the Farm Credit System Reform Act of 1996 amended the Farmer Mac title to allow Farmer Mac to purchase loans directly from lenders and to issue and guarantee mortgage-backed securities without requiring that a minimum cash reserve or subordinated (first loss) interest be maintained by the lenders, poolers or investors as had been required under its original authority. The 1996 Act also increased Farmer Mac’s capital requirements over time and expanded the regulatory authorities of the FCA. Farmer Mac operates through two programs, ‘‘Farmer Mac I,’’ which involves mortgage loans secured by first liens on agricultural real estate or rural housing (qualified loans), and ‘‘Farmer Mac II,’’ which involves guaranteed portions of USDA guaranteed loans. Farmer Mac operates by: (i) purchasing, or committing to purchase, newly originated or existing qualified loans or guaranteed portions from lenders; (ii) purchasing ‘‘AgVantage’’ bonds backed by qualified loans or guaranteed portions from lenders; and (iii) 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. 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 come 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. Farmer Mac must maintain core and risk based capital as provided in the Act and FCA regulations. 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 Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV 1258 THE BUDGET FOR FISCAL YEAR 2001 FARM CREDIT SYSTEM—Continued FEDERAL AGRICULTURAL MORTGAGE CORPORATION—Continued Balance Sheet (in millions of dollars) determines that an adequate loss reserve has been funded to back Farmer Mac guarantees. GUARANTEES Farmer Mac provides a guarantee of timely payment of principal and interest on securities backed by qualified loans or pools of qualified loans. These securities are not guaranteed by the United States, and are not ‘‘government securities’’. The 1996 Act removed requirements that loan originators or other third parties maintain cash reserves or subordinated securities in connection with the issuance of Farmer Mac’s guaranteed securities. Farmer Mac is subject to reporting requirements under securities laws and its guaranteed mortgage-backed securities are subject to registration with the Securities and Exchange Commission under the 1933 and 1934 Securities Acts. REGULATION Farmer Mac is federally regulated by the FCA’s Office of Secondary Market Oversight (OSMO). OSMO is responsible for examination of and rulemaking for Farmer Mac, including the establishment of risk-based capital requirements by regulation. On November 12, 1999, FCA published a notice of proposed rulemaking, stress test, and a request for public comments. Following the comment period, a final risk-based capital rule and stress test will be developed by FCA and published in the Federal Register. 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, 1999, Farmer Mac’s total capital exceeds regulatory and statutory requirements. Lastly, in connection with the enactment of the 1996 Act, Congress requested, during Farmer Mac’s transition to the expanded capital requirements thereunder, that FCA, in a cooperative effort with the U.S. Treasury, monitor Farmer Mac’s financial condition and report to Congress semiannually. Status of Guaranteed Loans (in millions of dollars) 1999 actual 99–4180 2000 est. 2001 est. 2111 2131 Limitation on guaranteed loans .................................... Guaranteed loan commitments ..................................... 1,662 1,662 2,077 2,077 2,597 2,597 2150 Total guaranteed loan commitments ............................ 3,324 4,154 5,194 2210 2231 2251 Cumulative balance of guaranteed loans outstanding: Outstanding, start of year ............................................. Disbursements of new guaranteed loans ...................... Repayments and prepayments ...................................... 1,048 1,662 ¥653 2,057 2,077 ¥816 3,318 2,597 ¥1,021 2290 Outstanding, end of year .......................................... 2,057 3,318 4,894 2299 Memorandum: Guaranteed amount of guaranteed loans outstanding, end of year ................................................................ 2,057 3,318 4,894 Statement of Operations (in millions of dollars) 99–4180 1998 actual 1999 actual 2000 est. 2001 est. 0101 0101 0101 0102 Revenue: Net Interest Income ................................. Guarantee Fee Income ............................. Gain on Security Issuance ...................... Expense .................................................... 6 2 2 –7 14 6 .................. –14 18 8 .................. –18 22 10 .................. –23 0105 Net income or loss (–) ............................ 3 6 8 9 0199 Total comprehensive income ................... 3 7 9 9 VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00008 99–4180 1998 actual 1999 actual 622 2 5 853 3 12 853 3 15 853 4 18 614 17 1,278 30 1,598 37 1,998 46 631 435 1,308 506 1,635 476 2,044 89 ASSETS: Investment in securities .......................... Receivables, net ...................................... Advances and prepayments .................... Net value of assets related to direct loans receivable: 1401 Direct loans receivable, gross ............ 1402 Interest receivable .............................. 1201 1206 1207 1499 1801 Net present value of assets related to direct loans ........................... Cash and other monetary assets ............ 1999 2000 est. 2001 est. Total assets ........................................ LIABILITIES: 2201 Accounts payable .................................... 2202 Interest payable ....................................... 2203 Debt ......................................................... 2204 Liabilities for loan guarantees ................ 1,695 2,682 2,982 3,008 8 7 1,598 3 4 12 2,573 6 4 15 2,861 7 6 18 2,870 9 2999 1,616 2,595 2,887 2,903 79 87 95 105 f Total liabilities .................................... NET POSITION: 3300 Invested capital ....................................... 3999 Total net position ................................ 79 87 95 105 4999 Total liabilities and net position ............ 1,695 2,682 2,982 3,008 FEDERAL HOME LOAN BANK SYSTEM FEDERAL HOME LOAN BANKS Status of Direct Loans (in millions of dollars) 1999 actual 99–4200 2000 est. 2001 est. 1111 1131 Limitation on direct loans ............................................. ................... ................... ................... Direct loan obligations .................................................. 2,181,262 2,181,262 2,181,262 1150 Total direct loan obligations ......................................... 2,181,262 2,181,262 2,181,262 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 245,647 2,181,262 2,060,067 366,842 2,181,262 2,179,219 368,885 2,181,262 2,179,219 1290 Outstanding, end of year .......................................... 366,842 368,885 370,928 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. To accomplish this mission, the FHLBanks make loans, called advances, and provide other credit products and services to their 7,226 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. However, ‘‘community financial institutions’’ may also use long-term advances to finance small businesses, small farms, and small agribusinesses. Additionally, specialized advance programs provide funds for community reinvestment and affordable housing programs. All regulated financial depositories, ‘‘community financial institutions,’’ 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. Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FEDERAL HOME LOAN BANK SYSTEM—Continued Advances outstanding on September 30, 1999 totaled approximately $367 billion, a net increase of approximately $120 billion from the September 30, 1998 level of $246 billion. The principal source of funds for the lending operation is the sale of consolidated obligations to the public. On September 30, 1999, $477 billion of these obligations were outstanding. The consolidated obligations are not guaranteed by the U.S. Government as to principal or interest. Other sources of lendable funds include members’ deposits and capital. Deposits totaled $16 billion and total capital amounted to $27 billion as of September 30, 1999. 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 the greater of $100 million annually or 10 percent of the preceding year’s net income. The Act also requires that the FHLBanks contribute 20 percent of net earnings annually to assist in the payment of interest on bonds issued by the Resolution Funding Corporation. The forecast data for 2000 and 2001 contained in this material represents estimates and should not be construed as an official forecast of the FHLBanks System’s future position. VerDate 04-JAN-2000 22:08 Jan 28, 2000 Jkt 186484 PO 00000 Frm 00009 1259 Statement of Operations (in millions of dollars) 99–4200 1998 actual 1999 actual 2000 est. 2001 est. 0101 0102 Revenue ................................................... Expense (excludes payments to REFCORP) ............................................ 20,408 24,596 24,596 24,596 –18,810 –22,553 –22,553 –22,553 0105 Net income or loss (–) ............................ 1,598 2,043 2,043 2,043 Balance Sheet (in millions of dollars) 99–4200 ASSETS: Investments in US securities: 1102 Treasury securities, net ...................... 1201 Investments in other securities, net ....... 1206 Accounts receivable ................................. 1401 Net value of assets related to direct loans receivable: Direct loans receivable, gross .......................................... 1801 Cash and other monetary assets ............ 1803 Property, plant and equipment, net ........ 1901 Other assets ............................................ 1999 1998 actual 1999 actual 2000 est. 2001 est. 433 135,167 5,944 233 155,471 8,057 233 155,471 8,057 233 155,471 8,057 246,107 422 146 175 366,842 399 88 261 368,885 399 88 261 370,928 399 88 261 Total assets ........................................ LIABILITIES: 2101 REFCORP and Affordable Housing Program .................................................... 2201 Accounts payable .................................... 2202 Interest payable ....................................... 2203 Debt ......................................................... Other: 2207 Deposit funds and other borrowings 2207 Other ................................................... 388,394 531,351 533,394 535,437 510 165 6,427 336,262 580 59 8,709 477,472 580 59 8,709 477,472 580 59 8,709 477,472 23,550 354 16,147 1,452 16,147 1,452 16,147 1,452 2999 367,268 504,419 504,419 504,419 21,126 26,932 28,975 31,018 Total liabilities .................................... NET POSITION: 3100 Invested capital ....................................... 3999 Total net position ................................ 21,126 26,932 28,975 31,018 4999 Total liabilities and net position ............ 388,394 531,351 533,394 535,437 Fmt 3604 Sfmt 3616 E:\BUDGET\GOV.XXX pfrm02 PsN: GOV