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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. f STUDENT LOAN MARKETING ASSOCIATION 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 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 USA Education, Inc. and must wind down and be liquidated by September 30, 2008. Under legislation passed in 1998, if USA Education, Inc. 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. STUDENT LOAN MARKETING ASSOCIATION ANNUAL LOAN ACTIVITY [In millions of dollars] Status of Direct Loans (in millions of dollars) 2001 est. 2002 est. 1111 1131 Limitation on direct loans ............................................. ................... ................... ................... Direct loan obligations .................................................. 13,904 11,294 12,284 1150 Total direct loan obligations ......................................... Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 1231 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 ............. 1290 Outstanding, end of year .......................................... 13,904 11,294 2000 actual Subtotal, Guaranteed student loans ............................. Other ............................................................................................ 2000 actual Identification code 99–1500–0–3–502 Guaranteed student loans: Stafford: Purchased ........................................................................... Warehoused ........................................................................ PLUS/SLS: Purchased .............................................................. Health professions loans; Purchased ..................................... 11,753 2,151 10,706 588 11,635 649 Total ............................................................................... 13,904 11,294 12,284 2001 est. 2002 est. 9,550 9,416 10,393 1,100 300 150 1,102 990 1,092 1 .................... .................... 12,284 37,797 13,904 37,213 11,294 31,833 12,284 ¥5,712 ¥8,975 199 ¥4,834 ¥12,000 160 ¥3,187 ¥12,000 144 37,213 31,833 29,074 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 adjust1237 VerDate 19-MAR-2001 10:05 Mar 26, 2001 Jkt 188677 PO 00000 Frm 00001 Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV 1238 THE BUDGET FOR FISCAL YEAR 2002 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) 1999 actual Identification code 99–1500–0–3–502 2000 actual 2001 est. 2002 est. 0101 0102 Revenue ................................................... Expense .................................................... 2,854 –2,391 3,647 –3,160 .................. .................. .................. .................. 0105 Net income or loss (–) ............................ 463 487 .................. .................. Balance Sheet (in millions of dollars) 1999 actual Identification code 99–1500–0–3–502 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 2000 actual 2001 est. 2002 est. 1,401 .................. 942 2,009 684 16 1,363 .................. 1,090 2,393 916 21 1,391 .................. 981 2,310 825 22 1,419 .................. 883 2,483 743 23 37,947 37,317 31,922 29,155 –150 –104 –89 –81 37,797 38 172 435 37,213 134 163 407 31,833 141 171 426 29,074 148 180 447 Total assets ........................................ LIABILITIES: 2202 Interest payable ....................................... 2203 Debt ......................................................... 2207 Other ........................................................ 43,494 43,700 38,100 35,400 293 41,591 677 417 41,501 707 375 36,083 742 338 33,483 779 2999 42,561 42,625 37,200 34,600 Total liabilities .................................... NET POSITION: 3300 Invested Capital ...................................... 933 1,075 900 800 3999 Total net position ................................ 933 1,075 900 800 4999 Total liabilities and net position ............ 43,494 43,700 38,100 35,400 f FEDERAL NATIONAL MORTGAGE ASSOCIATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–2500–0–3–371 2001 est. 2002 est. 1131 Direct loan obligations .................................................. 133,266 172,261 198,760 1150 Total direct loan obligations ......................................... 133,266 172,261 198,760 518,629 587,600 693,238 125,681 162,755 197,223 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: 1231 Direct loan disbursements ........................................ 1210 VerDate 19-MAR-2001 10:05 Mar 26, 2001 Jkt 188677 PO 00000 Frm 00002 Fmt 3604 1232 1251 1264 Purchase of loans assets .......................................... Repayments: Repayments and prepayments ................. Write-offs for default: Other adjustments, net ............. 1290 Outstanding, end of year .......................................... 11,747 536 170 ¥67,233 ¥57,653 ¥98,035 ¥1,224 ................... ................... 587,600 693,238 792,596 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, 2000, Fannie Mae held a net mortgage portfolio totaling $571 billion and had net outstanding guaranteed mortgage-backed securities of $701 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), and an exemption of its debt and mortgage securities from Securities and Exchange Commission registration requirements. An additional advantage is that the Secretary of the Treasury may purchase and hold up to $2.25 billion of securities issued by Fannie Mae under terms and conditions and at prices determined by the Secretary to be appropriate. 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 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES geographically targeted goal is 24 percent and the special affordable housing goal is 14 percent. These goals are also in effect for 2000. Fannie Mae exceeded all of the housing goals in 1999 with low- and moderate-income purchases at 45.9 percent, geographically targeted purchases at 26.8 percent, and special affordable housing purchases at 17.6 percent. In October 2000, HUD set new affordable housing goals for the period covering 2001 to 2003. The goals are 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 30 percent to cover management and operations risk. Total capital (shareholder’s equity plus allowance for loan losses) at the end of September 2000 was $20.5 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. For the four quarters ending September 2000, Fannie Mae earned $4.3 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. Balance Sheet (in millions of dollars) Identification code 99–2500–0–3–371 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 ................................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1101 1699 1801 1803 Value of assets related to direct loans .......................................... Cash and other monetary assets ............ Property, plant and equipment, net ........ 1999 Total assets ........................................ LIABILITIES: 2101 Accounts payable .................................... 2102 Accrued interest payable ......................... 2105 Other ........................................................ 2203 Debt ......................................................... 2204 Estimated liability for loan guarantees VerDate 19-MAR-2001 10:05 Mar 26, 2001 1239 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued 1999 actual 2000 actual 2001 est. 2002 est. 5 20 .................. .................. 33 36,498 25 55,130 .................. 57,714 .................. 63,386 2206 2207 Pension and other actuarial liabilities Subtotal, Federal taxes payable .............. 288 160 362 31 .................. .................. .................. .................. Total liabilities .................................... NET POSITION: Cumulative results of operations: 3300 Cumulative results of operations ....... 3300 Change in Stockholder Equity ............ 534,477 618,460 724,843 827,726 17,674 –619 20,769 –1,083 24,311 –1,773 28,323 –2,893 2999 3999 Total net position ................................ 17,055 19,687 22,538 25,429 4999 Total liabilities and net position ............ 551,532 638,147 747,380 853,156 f MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–2501–0–3–371 2001 est. 2002 est. 1131 Direct loan obligations .................................................. 160,105 232,349 237,019 1150 Total direct loan obligations ......................................... 160,105 232,349 237,019 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 938,484 194,154 ¥111,810 1,020,828 232,349 ¥126,237 1,126,939 237,019 ¥144,766 1290 Outstanding, end of year .......................................... 1,020,828 1,126,939 1,219,193 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. Balance Sheet (in millions of dollars) 477,130 27,367 538,255 33,349 635,655 41,896 734,714 41,374 –194 –199 –201 –204 504,303 10,513 180 571,405 11,345 222 677,351 12,316 .................. 775,884 13,885 .................. 551,532 638,147 747,380 853,156 254 6,575 11 524,880 2,311 385 7,509 15 607,039 3,119 .................. 10,177 .................. 711,031 3,635 .................. 11,787 .................. 812,430 3,510 Jkt 188677 PO 00000 Frm 00003 Fmt 3604 1999 actual Identification code 99–2501–0–3–371 ASSETS: Net value of assets related to direct loans receivable and acquired defaulted guaranteed loans receivable: 1601 Direct loans, gross .............................. 1603 Allowance for estimated uncollectible loans and interest (–) .................... 1699 Value of assets related to direct loans .......................................... 1999 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... Sfmt 3633 E:\BUDGET\GOV.XXX pfrm07 2000 actual 2001 est. 2002 est. 939,092 1,021,437 1,127,548 1,219,798 –608 –609 –609 –605 938,484 1,020,828 1,126,939 1,219,193 938,484 1,020,828 1,126,939 1,219,193 938,484 1,020,828 1,126,939 1,219,193 PsN: GOV 1240 THE BUDGET FOR FISCAL YEAR 2002 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued PORTFOLIO PROGRAMS—Continued MORTGAGE-BACKED SECURITIES—Continued Balance Sheet (in millions of dollars)—Continued 1999 actual Identification code 99–2501–0–3–371 2999 Total liabilities .................................... 2000 actual 2001 est. 2002 est. 938,484 1,020,828 1,126,939 1,219,193 f FEDERAL HOME LOAN MORTGAGE CORPORATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–4420–0–3–371 2001 est. 2002 est. 1131 Direct loan obligations .................................................. 81,090 95,778 100,750 1150 Total direct loan obligations ......................................... 81,090 95,778 100,750 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 315,968 81,090 ¥35,434 361,624 95,778 ¥45,151 412,251 100,750 ¥40,113 1290 Outstanding, end of year .......................................... 361,624 412,251 472,888 The Federal Home Loan Mortgage Corporation (Freddie Mac), is a federally-charted, shareholder-owned, private 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, 2000, Freddie Mac held a net mortgage portfolio totaling $359 billion and had net outstanding guaranteed mortgage-backed securities of $559 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), and an exemption for their debt and mortgage securities from SEC filing registration requirements. An additional advantage is that the Secretary of the Treasury may purchase and hold up to $2.25 billion of securities issued by Freddie Mac under terms and conditions and at prices determined by the Secretary to be appropriate. 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 serves 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 VerDate 19-MAR-2001 10:05 Mar 26, 2001 Jkt 188677 PO 00000 Frm 00004 Fmt 3604 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 and 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. Additionally, within the special affordable goal was a multifamily mortgage purchase target for Freddie Mac of $1.0 billion. In an October 2000 rule, HUD applied the 1996–1999 goals to 2000 and established new goals for 2001–2003: 50 percent for the low- and moderate-income goal, 31 percent for the geographically targeted goal, 20 percent for the special affordable housing goal and a multifamily target for Freddie Mac of $2.1 billion. Freddie Mac exceeded all of the housing goals in 1999 with low- and moderate-income purchases of 46.1 percent, geographically targeted purchases of 27.5 percent, special affordable purchases of 17.2 percent, and the multifamily portion of the special affordable purchases of $2.3 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. OFHEO intends to issue a final rule in 2001 establishing the risk-based capital standards. For the four quarters ending September 2000, Freddie Mac recorded net income of $2.5 billion. The financial data contained in this material relating to future periods represent estimates that have been prepared Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM 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) 1999 actual 2000 actual 26,515 18,643 487 48,593 22,107 945 54,693 22,082 1,838 56,070 22,832 1,838 315,968 –345 361,624 –334 412,251 –339 472,888 –360 315,623 1,992 1,129 496 361,290 224 656 –469 411,912 252 598 2,162 472,528 259 541 2,292 1999 Total assets ........................................ LIABILITIES: Accounts payable .................................... Accounts payable .................................... Interest payable ....................................... Debt ......................................................... Pension and other actuarial liabilities Other: 2207 Accrued payroll and benefits .............. 2207 Accrued annual leave (funded or unfunded) ........................................... 2207 Other Liabilities .................................. 364,885 433,346 493,537 556,360 2101 2201 2202 2203 2206 115 2,146 2,311 341,014 19 227 1,823 2,988 406,794 26 448 1,448 6,331 461,625 36 884 1,011 6,844 521,647 49 82 60 44 32 2 8,056 2 8,234 2 7,742 2 7,923 2999 Identification code 99–4420–0–3–371 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 ............................................ 2001 est. 2002 est. Total liabilities .................................... NET POSITION: Invested capital ....................................... 353,745 420,154 477,676 538,392 3100 11,140 13,192 15,861 17,968 3999 Total net position ................................ 11,140 13,192 15,861 17,968 4999 Total liabilities and net position ............ 364,885 433,346 493,537 556,360 f MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–4440–0–3–371 2001 est. 2002 est. 1131 Direct loan obligations .................................................. 142,576 185,781 Total direct loan obligations ......................................... 142,576 185,781 Outstanding, end of year .......................................... 559,242 611,015 687,071 Balance Sheet (in millions of dollars) 1999 actual Identification code 99–4440–0–3–371 1901 ASSETS: Underlying Mortgages .............................. 2000 actual 2001 est. 2002 est. 529,231 559,242 611,015 687,071 Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... 529,231 559,242 611,015 687,071 529,213 559,242 611,015 687,071 2999 529,213 559,242 611,015 687,071 1999 Total liabilities .................................... f 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 processing (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. 183,085 1150 1290 1241 183,085 Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–4130–0–3–351 Cumulative balance of direct loans outstanding: 1210 Outstanding, start of year ............................................. 1231 Disbursements: Direct loan disbursements ................... 1251 Repayments: Repayments and prepayments ................. VerDate 19-MAR-2001 10:05 Mar 26, 2001 Jkt 188677 529,213 142,576 ¥112,547 559,242 185,781 ¥134,008 PO 00000 Frm 00005 611,015 183,085 ¥107,029 Fmt 3604 2001 est. 2002 est. 1131 Direct loan obligations .................................................. 48,122 50,000 50,000 1150 Total direct loan obligations ......................................... 48,122 50,000 50,000 Sfmt 3643 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV 1242 THE BUDGET FOR FISCAL YEAR 2002 FARM CREDIT SYSTEM—Continued AGRICULTURAL CREDIT BANK—Continued Financing Activities (in millions of dollars) Status of Direct Loans (in millions of dollars)—Continued 2000 actual Identification code 99–4130–0–3–351 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 .......................................... 1999 actual 99–4130 2001 est. 2002 est. 18,092 48,121 ¥46,896 ¥47 19,270 50,000 ¥49,502 ¥16 19,752 50,000 ¥49,310 ¥16 19,270 19,752 20,426 Beginning balance of outstanding system obligations ......................................................... Consolidated systemwide and other bank bonds issued ................................................ Consolidated systemwide and other bank bonds retired ................................................ Consolidated systemwide notes, net ................ Ending balance of outstanding system obligations ............................................................. Statement of Operations (in millions of dollars) Identification code 99–4130–0–3–351 1999 actual 2000 actual 2000 actual 2001 est. 2002 est. 18,079 19,468 20,971 21,495 11,875 6,155 6,500 6,500 9,657 –829 3,859 –793 6,376 400 6,266 500 19,468 20,971 21,495 22,229 f 2001 est. 2002 est. 0101 0102 Total interest income .............................. Total interest expense ............................. 1,424 –1,063 1,715 –1,323 1,930 –1,489 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expense .......................................... 361 46 –323 392 39 –257 441 44 –278 469 46 –287 0115 Net income or loss (–) ............................ –277 –218 –234 –241 0191 Total revenues ......................................... 1,470 1,754 1,974 2,096 0192 Total expenses ......................................... –1,386 –1,580 –1,767 –1,868 0195 Total income or loss (–) ......................... 84 174 207 228 0199 Total comprehensive income ................... 84 174 207 228 FARM CREDIT BANKS 2,050 –1,581 Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–4160–0–3–371 2001 est. 2002 est. 2000 actual 3,755 182 4,318 203 4,426 208 4,578 215 18,092 19,270 19,752 20,426 –314 –321 –329 –340 17,778 159 18,949 167 19,423 176 20,086 179 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 ......................... 21,874 23,637 24,233 25,058 167 301 184 170 19,468 20,971 21,495 22,229 351 228 302 310 310 318 320 229 2999 20,214 21,884 22,307 22,948 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 Value of assets related to direct loans .......................................... Property, plant and equipment, net ........ 1999 Total liabilities .................................... NET POSITION: 3300 Cumulative results of operations ............ 2001 est. 2002 est. 1,660 1,753 1,926 2,110 3999 Total net position ................................ 1,660 1,753 1,926 2,110 4999 Total liabilities and net position ............ 21,874 23,637 24,233 25,058 Statement of Changes in Net Worth (in millions of dollars) 1999 actual 2000 actual Beginning balance of net worth ......................... 1,697 1,660 1,753 1,926 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 5 80 84 –27 –19 .................. 53 174 –36 8 67 60 206 –40 .................. 56 60 228 –40 .................. Ending balance of net worth .............................. 1,660 1,753 1,926 2,110 Jkt 188677 PO 00000 99–4130 VerDate 19-MAR-2001 10:05 Mar 26, 2001 47,553 45,173 46,477 1150 Total direct loan obligations ......................................... 47,553 45,173 46,477 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 ............. 45,823 47,541 ¥46,651 ¥20 Outstanding, end of year .......................................... 46,693 46,693 48,241 45,227 46,418 ¥43,682 ¥44,499 3 ................... 48,241 50,160 Note.—Loans outstanding at end of year do not include nonaccrual loans and sales contracts. 1999 actual Identification code 99–4130–0–3–351 Direct loan obligations .................................................. 1290 Balance Sheet (in millions of dollars) 1131 2001 est. Frm 00006 2002 est. Fmt 3604 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, 2000 provided funds to 58 Federal Land Credit Associations (FLCA), 53 Production Credit Associations (PCAs), and 32 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, 2000, 3 Federal Land Bank Associations originated and serviced long-term real estate loans for 1 of the 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 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. Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM—Continued FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FARMER MAC) Statement of Operations (in millions of dollars) 1999 actual 2000 actual 0101 0102 Total interest income .............................. Total interest expense ............................. 3,317 –2,662 3,610 –3,037 3,785 –3,316 3,894 –3,439 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expenses ........................................ 655 59 –325 573 61 –233 469 31 –180 455 31 –176 0115 Net income or loss (–) ............................ –266 –172 –149 –145 0191 Total revenues ......................................... 3,376 3,671 3,816 3,925 0192 Total expenses ......................................... –2,987 –3,270 –3,496 –3,615 0195 Total income or loss (–) ......................... 389 401 320 310 0199 Total comprehensive income ................... 389 401 320 310 Identification code 99–4160–0–3–371 2001 est. 2002 est. Balance Sheet (in millions of dollars) 1999 actual 2000 actual 9,590 754 9,978 770 9,926 780 10,036 808 45,823 46,693 48,236 50,155 –358 –244 –239 –237 45,465 336 46,449 298 47,997 361 49,918 376 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 ......................... 56,145 57,495 59,064 61,138 222 176 191 190 50,083 52,115 53,568 55,433 906 511 313 514 280 533 383 551 2999 51,722 53,118 54,572 56,557 4,423 4,377 4,492 4,580 Identification code 99–4160–0–3–371 ASSETS: Cash and investment securities ............. 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 (–) .................... 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 ............ 2001 est. 2002 est. 3999 Total net position ................................ 4,423 4,377 4,492 4,580 4999 Total liabilities and net position ............ 56,145 57,495 59,064 61,137 Statement of Changes in Net Worth (in millions of dollars) 1999 actual 2000 actual Beginning balance of net worth ......................... 4,467 4,423 4,377 2001 est. 2002 est. Capital stock and participations issued ......... Capital stock and participations retired ......... Surplus Retired ................................................. Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 68 124 .................. 388 –341 –35 153 241 .................. 401 –267 –92 50 54 .................. 319 –219 19 48 53 .................. 311 –218 .................. Ending balance of net worth .............................. 4,423 4,377 4,492 4,580 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 United States Department of Agriculture (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. 4,492 99–4160 Financing Activities (in millions of dollars) 99–4160 1999 actual Beginning balance of outstanding system obligations ...................... Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net Ending balance of outstanding system obligations ................................... VerDate 19-MAR-2001 10:05 Mar 26, 2001 2000 actual 2001 est. 2002 est. 47,714 50,082 52,115 53,568 43,114 29,025 31,344 32,013 39,878 –868 30,817 3,825 30,714 823 31,070 922 50,082 52,115 Jkt 188677 PO 00000 1243 53,568 Frm 00007 55,433 Fmt 3604 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. As of September 30, 2000, Farmer Mac’s total capital exceeded statutory requirements. 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 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV 1244 THE BUDGET FOR FISCAL YEAR 2002 FARM CREDIT SYSTEM—Continued FEDERAL AGRICULTURAL MORTGAGE CORPORATION (FARMER MAC)— Continued or pools of qualified loans. These securities are not guaranteed by the United States, and are not ‘‘government 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. 2999 Total liabilities .................................... NET POSITION: 3300 Invested capital ....................................... 2000 actual Identification code 99–4180–0–3–351 2001 est. 2002 est. 2131 Guaranteed loan commitments ..................................... 2,077 2,597 2,306 2150 Total guaranteed loan commitments ............................ 2,077 2,597 2,306 2210 2231 2251 Cumulative balance of guaranteed loans outstanding: Outstanding, start of year ............................................. Disbursements of new guaranteed loans ...................... Repayments and prepayments ...................................... 2,057 2,077 ¥816 3,318 2,597 ¥1,021 4,894 2,306 ¥1,200 2290 Outstanding, end of year .......................................... 3,318 4,894 6,000 2299 Memorandum: Guaranteed amount of guaranteed loans outstanding, end of year ................................................................ 3,318 4,894 6,000 Statement of Operations (in millions of dollars) Identification code 99–4180–0–3–351 1999 actual 2000 actual 2001 est. 2002 est. Revenue: 0101 Net Interest Income ................................. 0101 Guarantee Fee Income ............................. 0101 Gain on Security Issuance ...................... 0102 Expense .................................................... 14 6 .................. –14 18 8 .................. –18 22 10 .................. –23 25 12 .................. –27 0105 Net income or loss (–) ............................ 6 8 9 10 0199 Total comprehensive income ................... 6 9 9 10 Balance Sheet (in millions of dollars) 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 .............................. 1499 1801 Net present value of assets related to direct loans ........................... Cash and other monetary assets ............ 1999 Total assets ........................................ LIABILITIES: 2201 Accounts payable .................................... 2202 Interest payable ....................................... 2203 Debt ......................................................... 2204 Liabilities for loan guarantees ................ VerDate 19-MAR-2001 10:05 Mar 26, 2001 2,903 3,113 87 95 105 115 Total net position ................................ 87 95 105 115 4999 Total liabilities and net position ............ 2,682 2,982 3,008 3,228 f FEDERAL HOME LOAN BANK SYSTEM FEDERAL HOME LOAN BANKS Status of Guaranteed Loans (in millions of dollars) 1201 1206 1207 2,887 3999 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. Comments were due June 12, 2000. After considering the comments, the FCA Board adopted final risk-based capital rule and stress test on February 21, 2001. 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. Identification code 99–4180–0–3–351 2,595 1999 actual 2000 actual 2001 est. 853 3 12 853 3 15 853 4 18 853 4 18 1,278 30 1,598 37 1,998 46 2,198 55 1,308 506 1,635 476 2,044 89 2,253 100 2,682 2,982 3,008 3,228 4 12 2,573 6 4 15 2,861 7 6 18 2,870 9 7 21 3,074 11 Jkt 188677 PO 00000 Frm 00008 2002 est. Fmt 3604 Status of Direct Loans (in millions of dollars) 2000 actual Identification code 99–4200–0–3–371 2001 est. 2002 est. 1131 Direct loan obligations ..................................... 4,193,965 4,193,965 4,193,965 1150 Total direct loan obligations ............................ 4,193,965 4,193,965 4,193,965 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................... Disbursements: Direct loan disbursements ..... Repayments: Repayments and prepayments ... 366,842 4,193,965 –4,116,302 444,505 4,193,965 –4,191,743 446,727 4,193,965 –4,191,743 1290 Outstanding, end of year ............................. 444,505 446,727 448,949 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 7,220 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. Advances outstanding on September 30, 2000 totaled approximately $420 billion, a net increase of approximately $65 billion from the September 30, 1998 level of $365 billion. The principal source of funds for the lending operation is the sale of consolidated obligations to the public. On September 30, 2000, $577 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 $14 billion and total capital amounted to $31 billion as of September 30, 2000. 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 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FEDERAL HOME LOAN BANK SYSTEM—Continued 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, as amended in 1999, 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 2001 and 2002 contained in this material represents estimates and should not be construed as an official forecast of the FHLBanks System’s future position. Statement of Operations (in millions of dollars) Identification code 99–4200–0–3–371 0101 0102 1999 actual 2000 actual 2001 est. 2002 est. Revenue ................................................... Expense (excludes payments to REFCORP) ............................................ 24,596 36,461 36,461 36,461 –22,553 –34,239 –34,239 –34,239 Net income or loss (–) ............................ 2,043 2,222 2,222 2,222 1245 Balance Sheet (in millions of dollars) 1999 actual Identification code 99–4200–0–3–371 2000 actual 2001 est. 2002 est. 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 ............................................ 233 155,471 8,057 232 177,913 10,583 232 177,913 10,583 232 177,913 10,583 366,842 399 88 261 444,505 410 119 204 446,727 410 119 204 448,949 410 119 204 1999 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 ................................................... 531,351 633,966 636,188 638,410 580 59 8,709 477,472 737 91 11,016 577,057 737 91 11,016 577,057 737 91 11,016 577,057 16,147 1,452 869 13,617 869 13,617 869 13,617 2999 504,419 603,387 603,387 603,387 Total liabilities .................................... NET POSITION: 3100 Invested capital ....................................... VerDate 19-MAR-2001 10:05 Mar 26, 2001 Jkt 188677 PO 00000 Frm 00009 Fmt 3604 26,932 30,579 32,801 35,023 3999 Total net position ................................ 26,932 30,579 32,801 35,023 4999 0105 Total liabilities and net position ............ 531,351 633,966 636,188 638,410 Sfmt 3616 E:\BUDGET\GOV.XXX pfrm07 PsN: GOV