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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 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 actual Identification code 99–1500–0–3–502 2002 est. 2003 est. 1111 1131 Limitation on direct loans ............................................. ................... ................... ................... Direct loan obligations .................................................. 12,088 13,097 15,250 1150 Total direct loan obligations ......................................... Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: 1251 Repayments and prepayments .................................. 1252 Proceeds from loan asset sales or discounted ........ 1264 Write-offs for default: Other adjustments, net ............. 1210 1231 1290 Outstanding, end of year .......................................... 12,088 13,097 15,250 37,213 12,088 41,032 13,097 40,659 15,250 ¥3,499 ¥4,942 172 ¥3,857 ¥9,751 138 ¥4,268 ¥14,750 124 41,032 40,659 37,015 Guaranteed student loans: Stafford: Purchased ........................................................................... Warehoused ........................................................................ PLUS/SLS: Purchased .............................................................. 2001 actual 8,388 1,113 764 11,138 — 979 12,969 — 1,140 Subtotal, Guaranteed student loans ............................. Other ............................................................................................ 10,265 1,823 12,117 980 14,109 1,141 Total ............................................................................... 12,088 13,097 15,250 2002 est. 2003 est. 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 adjustable rate cumulative preferred stock, which was required to 1205 VerDate 11-MAY-2000 11:15 Jan 25, 2002 Jkt 189685 PO 00000 Frm 00001 Fmt 3604 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV 1206 THE BUDGET FOR FISCAL YEAR 2003 STUDENT LOAN MARKETING ASSOCIATION—Continued 1231 1232 1251 1264 Disbursements: Direct loan disbursements ........................................ Purchase of loans assets .......................................... Repayments: Repayments and prepayments ................. Write-offs for default: Other adjustments, net ............. 1290 Outstanding, end of year .......................................... STUDENT LOAN MARKETING ASSOCIATION—Continued be redeemed prior to such date was redeemed on December 10, 2001. 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) 2000 actual Identification code 99–1500–0–3–502 2001 actual 2002 est. 2003 est. 0101 0102 Revenue ................................................... Expense .................................................... 3,647 –3,160 2,952 –2,850 .................. .................. .................. .................. 0105 Net income or loss (–) ............................ 487 102 .................. .................. Balance Sheet (in millions of dollars) 2000 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 2001 actual 2002 est. 2003 est. 1,363 .................. 1,090 2,393 916 21 1,597 .................. 1,207 4,829 1,669 11 1,565 .................. 1,219 2,327 1,686 12 1,424 .................. 1,182 1,109 1,635 12 37,317 41,185 40,811 37,153 –104 –153 –152 –138 37,213 134 163 407 41,032 71 .................. 310 40,659 71 .................. 313 37,015 69 .................. 304 Total assets ........................................ LIABILITIES: 2202 Interest payable ....................................... 2203 Debt ......................................................... 2207 Other ........................................................ 43,700 50,726 47,852 42,750 417 41,501 707 332 47,321 1,762 326 44,681 1,726 293 39,905 1,553 2999 42,625 49,415 46,733 41,751 Total liabilities .................................... NET POSITION: 3300 Invested Capital ...................................... 1,075 1,311 1,119 999 3999 Total net position ................................ 1,075 1,311 1,119 999 4999 Total liabilities and net position ............ 43,700 50,726 47,852 42,750 * In the first quarter of 2001, in accordance with the Privatization Act, the GSE transferred substantially all of its fixed assets and real estate to certain private non-GSE entities in USA education. f FEDERAL NATIONAL MORTGAGE ASSOCIATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 2001 actual Identification code 99–2500–0–3–371 2002 est. 2003 est. 1131 Direct loan obligations .................................................. 246,927 311,677 234,021 1150 Total direct loan obligations ......................................... 246,927 311,677 234,021 1210 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. 587,600 700,484 818,161 PO 00000 Frm 00002 Fmt 3604 VerDate 11-MAY-2000 11:15 Jan 25, 2002 Jkt 189685 235,339 301,883 233,494 5,826 697 723 ¥127,259 ¥184,903 ¥108,991 ¥1,022 ................... ................... 700,484 818,161 943,388 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, 2001, Fannie Mae held a net mortgage portfolio totaling $687 billion and had net outstanding guaranteed mortgage-backed securities of $817 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 Sfmt 3604 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES 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. These goals were also in effect for 2000. Fannie Mae exceeded all of the housing goals in 2000 with low- and moderate-income purchases at 49 percent, geographically targeted purchases at 31 percent, and special affordable housing purchases at 19 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 2001 was $23.8 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 2001, Fannie Mae earned $5.1 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: 1101 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 (–) .................... 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 ......................................................... VerDate 11-MAY-2000 11:15 Jan 25, 2002 1207 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued 2000 actual 2001 actual 2002 est. 2003 est. 20 267 .................. .................. 25 55,130 1,325 58,342 .................. 59,500 .................. 71,879 2204 2206 2207 Estimated liability for loan guarantees Pension and other actuarial liabilities Subtotal, Federal taxes payable .............. 3,119 362 31 15,374 402 730 13,171 .................. .................. 12,966 .................. .................. Total liabilities .................................... NET POSITION: Cumulative results of operations: 3300 Cumulative results of operations ....... 3300 Change in Stockholder Equity ............ 618,460 752,871 873,002 1,007,821 20,769 –1,083 24,541 –10,763 29,460 –9,528 35,086 –10,220 2999 3999 Total net position ................................ 19,687 13,778 19,932 24,866 4999 Total liabilities and net position ............ 638,147 766,650 892,934 1,032,688 f MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 2001 actual Identification code 99–2501–0–3–371 2002 est. 2003 est. 1131 Direct loan obligations .................................................. 450,215 441,913 346,965 1150 Total direct loan obligations ......................................... 450,215 441,913 346,965 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 1,020,828 433,500 ¥226,197 1,228,131 441,913 ¥300,876 1,369,168 346,965 ¥207,091 1290 Outstanding, end of year .......................................... 1,228,131 1,369,168 1,509,042 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) 2000 actual Identification code 99–2501–0–3–371 538,255 33,349 655,318 31,684 809,996 6,187 928,024 13,678 –199 –201 –200 –200 571,405 11,345 222 686,801 19,686 229 815,983 17,452 .................. 941,502 19,307 .................. 638,147 766,650 892,934 1,032,688 385 7,509 15 607,039 727 8,628 17 726,992 .................. 10,655 .................. 849,176 .................. 12,532 .................. 982,323 PO 00000 Frm 00003 Fmt 3604 Jkt 189685 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 pfrm11 2001 actual 2002 est. 2003 est. 1,021,437 1,227,528 1,369,770 1,509,643 –609 –603 –602 –601 1,020,828 1,226,925 1,369,168 1,509,042 1,020,828 1,226,925 1,369,168 1,509,042 1,020,828 1,228,131 1,369,168 1,509,042 PsN: GOV 1208 THE BUDGET FOR FISCAL YEAR 2003 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued PORTFOLIO PROGRAMS—Continued MORTGAGE-BACKED SECURITIES—Continued Balance Sheet (in millions of dollars)—Continued 2000 actual Identification code 99–2501–0–3–371 2999 Total liabilities .................................... 2001 actual 2002 est. 2003 est. 1,020,828 1,228,131 1,369,168 1,509,042 f FEDERAL HOME LOAN MORTGAGE CORPORATION PORTFOLIO PROGRAMS Status of Direct Loans (in millions of dollars) 2001 actual Identification code 99–4420–0–3–371 2002 est. 2003 est. 1131 Direct loan obligations .................................................. 191,203 220,700 149,978 1150 Total direct loan obligations ......................................... 191,203 220,700 149,978 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 361,624 191,203 ¥81,977 470,850 220,700 ¥149,330 542,220 149,978 ¥72,861 1290 Outstanding, end of year .......................................... 470,850 542,220 619,337 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, 2001, Freddie Mac held a net mortgage portfolio totaling $471 billion and had net outstanding guaranteed mortgage-backed securities of $636 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 11-MAY-2000 11:15 Jan 25, 2002 Jkt 189685 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 2000 with low- and moderate-income purchases of 50 percent, geographically targeted purchases of 29 percent, special affordable purchases of 21 percent, and the multifamily portion of the special affordable purchases of $2.4 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 published risk-based capital standards in September 2001 that become fully enforceable in September 2002. For the four quarters ending September 2001, Freddie Mac recorded net income of $3.4 billion. Sfmt 3604 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM 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) 2000 actual 2001 actual 48,593 22,107 945 65,964 22,762 2,170 74,324 24,948 2,507 72,104 24,688 2,769 359,638 –334 475,213 –327 541,876 –341 619,053 –349 359,304 224 656 1,517 474,886 583 774 4,768 541,535 657 913 3,026 618,704 637 1,077 3,267 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 .................................. 433,346 571,907 647,910 723,246 2101 2201 2202 2203 2206 227 1,823 2,988 406,794 26 763 1,457 4,452 531,312 75 448 970 7,141 605,384 82 884 523 9,065 677,220 89 60 35 38 42 2 8,234 2 19,305 2 14,058 2 13,800 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 ............................................ 2002 est. 2003 est. Total liabilities .................................... NET POSITION: Invested capital ....................................... 420,154 557,401 628,123 701,625 3100 13,192 14,506 19,787 21,621 3999 Total net position ................................ 13,192 14,506 19,787 21,621 4999 Total liabilities and net position ............ 433,346 571,907 647,910 723,246 f MORTGAGE-BACKED SECURITIES Status of Direct Loans (in millions of dollars) 2001 actual Identification code 99–4440–0–3–371 2002 est. 1231 1251 Disbursements: Direct loan disbursements ................... Repayments: Repayments and prepayments ................. 212,151 ¥135,549 280,188 ¥241,401 158,895 ¥102,239 1290 Outstanding, end of year .......................................... 635,844 674,631 731,287 Balance Sheet (in millions of dollars) 2000 actual 2001 actual ASSETS: 1901 Underlying Mortgages .............................. 559,242 635,844 674,631 731,287 1999 559,242 635,844 674,631 731,287 Identification code 99–4440–0–3–371 Direct loan obligations .................................................. 212,151 280,188 158,895 1150 Total direct loan obligations ......................................... 212,151 280,188 158,895 1210 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................................. 559,242 635,844 PO 00000 Frm 00005 Fmt 3604 11:15 Jan 25, 2002 Jkt 189685 2003 est. 559,242 635,844 674,631 731,287 2999 559,242 635,844 674,631 731,287 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 financed by assessments of system institutions. System banks finance loans 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 CoBank, ACB is headquartered in Denver, Colorado and serves eligible cooperatives nationwide, and provides funding to Agricultural Credit Associations (ACAs) in one of its regions. CoBank, ACB is the only Agricultural Credit Bank in the Farm Credit System. 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. Status of Direct Loans (in millions of dollars) 674,631 VerDate 11-MAY-2000 2002 est. Total assets ........................................ LIABILITIES: 2104 Resources payable ................................... 2003 est. 1131 1209 2001 actual Identification code 99–4130–0–3–351 2002 est. 2003 est. 1131 Direct loan obligations .................................................. 63,879 50,000 50,000 1150 Total direct loan obligations ......................................... 63,879 50,000 50,000 Sfmt 3643 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV 1210 THE BUDGET FOR FISCAL YEAR 2003 FARM CREDIT SYSTEM—Continued AGRICULTURAL CREDIT BANK—Continued Financing Activities (in millions of dollars) Status of Direct Loans (in millions of dollars)—Continued 2001 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 ............................... 2002 est. 2000 actual 99–4130 2003 est. Beginning balance of outstanding system obligations ......................................................... 2001 actual 2002 est. 2003 est. 19,468 20,971 21,275 22,083 Outstanding, end of year .......................................... 19,588 50,000 ¥49,215 ¥41 20,333 50,000 ¥49,136 ¥41 19,588 20,333 Consolidated systemwide and other bank bonds issued ................................................ Consolidated systemwide and other bank bonds retired ................................................ Consolidated systemwide notes, net ................ 6,155 7,038 7,000 7,000 –3,859 –792 –6,897 162 –6,392 200 –6,306 200 Ending balance of outstanding system obligations ............................................................. 1290 19,270 63,763 ¥63,359 ¥86 20,971 21,275 22,083 22,977 21,156 Statement of Operations (in millions of dollars) Identification code 99–4130–0–3–351 2000 actual 2001 actual 2002 est. f 2003 est. 0101 0102 Total interest income .............................. Total interest expense ............................. 1,715 –1,323 1,689 –1,223 1,769 –1,280 1,851 –1,340 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expense .......................................... 392 39 –257 466 41 –301 489 43 –306 511 45 –317 Identification code 99–4160–0–3–371 0115 Net income or loss (–) ............................ –218 –260 –263 –272 1131 Direct loan obligations .................................................. 73,564 64,728 58,775 0191 Total revenues ......................................... 1,754 1,730 1,812 1,896 1150 Total direct loan obligations ......................................... 73,564 64,728 58,775 0192 Total expenses ......................................... –1,580 –1,524 –1,586 –1,657 0195 Total income or loss (–) ......................... 174 206 226 239 0199 Total comprehensive income ................... 174 206 226 239 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 .......................................... Balance Sheet (in millions of dollars) 2000 actual 2001 actual 4,318 203 4,775 174 4,956 181 5,157 188 19,270 19,588 20,333 21,155 –321 –324 –336 –350 18,949 167 19,264 450 19,997 443 20,805 480 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 ......................... 23,637 24,663 25,577 26,630 301 363 375 395 20,971 21,275 22,083 22,977 302 310 604 222 627 231 652 240 2999 21,884 22,464 23,316 24,264 Identification code 99–4130–0–3–351 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 ............ 2002 est. 2003 est. 1,753 2,199 2,260 2,366 3999 Total net position ................................ 1,753 2,199 2,260 2,366 4999 Total liabilities and net position ............ 23,637 24,663 25,576 26,630 Statement of Changes in Net Worth (in millions of dollars) 2000 actual 2001 actual Beginning balance of net worth ......................... 1,660 1,753 2,199 2,260 Capital stock and participations issued ......... Capital stock and participations retired ......... Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... .................. –53 174 –36 8 300 –58 207 –47 45 .................. –73 226 –80 –12 .................. –44 240 –80 –10 Ending balance of net worth .............................. 1,753 2,199 2,260 2,366 PO 00000 Frm 00006 Fmt 3604 99–4130 VerDate 11-MAY-2000 11:15 Jan 25, 2002 Jkt 189685 2002 est. 2003 est. FARM CREDIT BANKS Status of Direct Loans (in millions of dollars) 2001 actual 2002 est. 2003 est. 46,693 52,445 55,011 73,483 64,676 58,735 ¥67,724 ¥62,110 ¥56,258 ¥7 ................... ................... 52,445 55,011 57,488 Note.—Loans outstanding at end of year do not include nonaccrual loans and sales contracts. The Agricultural Credit Act of 1987 (1987 Act) required the Federal Land Banks (FLBs) and Federal Intermediate Credit Banks (FICBs) to merge into a Farm Credit Bank (FCB) in each of the 12 Farm Credit districts. The FCBs 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, 2001 provided funds to 21 Federal Land Credit Associations (FLCA), 13 Production Credit Associations (PCAs), and 81 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. 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 3633 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM—Continued FEDERAL AGRICULTURAL MORTGAGE CORPORATION Statement of Operations (in millions of dollars) 2000 actual Identification code 99–4160–0–3–371 2001 actual 2002 est. Total interest income .............................. Total interest expense ............................. 3,610 –3,037 3,631 –3,076 3,220 –2,737 3,471 –3,005 0105 0111 0112 Net income or loss (–) ............................ Other income ........................................... Other expenses ........................................ 573 61 –233 555 79 –225 483 46 –210 466 44 –192 0115 Net income or loss (–) ............................ –172 –146 –164 –148 0191 Total revenues ......................................... 3,671 3,710 3,266 3,515 0192 Total expenses ......................................... –3,270 –3,301 –2,947 –3,197 0195 Total income or loss (–) ......................... 401 409 319 318 0199 Total comprehensive income ................... 401 409 319 318 Balance Sheet (in millions of dollars) 2000 actual 2001 actual 9,978 770 10,431 677 10,829 708 11,250 738 46,693 52,446 55,451 58,363 –244 –252 –258 –260 46,449 298 52,194 396 55,193 348 58,103 343 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 ......................... 57,495 63,698 67,078 70,434 176 443 459 457 52,115 58,010 61,242 64,410 313 514 360 447 365 452 421 475 2999 53,118 59,260 62,518 65,763 4,377 4,437 4,559 4,671 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 ............ 2002 est. 2003 est. 3999 Total net position ................................ 4,377 4,437 4,559 4,671 4999 Total liabilities and net position ............ 57,495 63,697 67,077 70,434 Statement of Changes in Net Worth (in millions of dollars) 2000 actual 2001 actual Beginning balance of net worth ......................... 4,423 4,377 4.437 4,559 Capital stock and participations issued ......... Capital stock and participations retired ......... Surplus Retired ................................................. Net income ....................................................... Cash/Dividends/Patronage Distributions .......... Other, net ......................................................... 153 –241 .................. 401 –268 –92 93 –142 –9 409 –289 –1 106 –81 .................. 320 –218 –5 85 –71 .................. 317 –218 –1 Ending balance of net worth .............................. 4,377 4,437 4,559 4,671 99–4160 2002 est. 2003 est. Financing Activities (in millions of dollars) 99–4160 2000 actual Beginning balance of outstanding system obligations ...................... 2001 actual 2002 est. 2003 est. 50,082 52,115 58,010 61,245 Consolidated systemwide and other bank bonds issued ....................... Consolidated systemwide and other bank bonds retired ....................... Consolidated systemwide notes, net 29,024 38,723 39,252 39,706 –30,817 3,825 –34,342 1,514 –36,735 718 –36,839 306 Ending balance of outstanding system obligations ................................... 52,115 58,010 61,245 64,418 Jkt 189685 PO 00000 VerDate 11-MAY-2000 11:15 Jan 25, 2002 Frm 00007 (FARMER MAC) 2003 est. 0101 0102 Identification code 99–4160–0–3–371 1211 Fmt 3604 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 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. 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. As of September 30, 2001, Farmer Mac’s total capital exceeded statutory requirements. In May of 2001 FCA published a final rule for risk based regulatory capital that allows for a one-year grace period before implementation. Therefore, as of May 2002, Farmer Mac must maintain risk-based regulatory capital as provided in 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 determines that an adequate loss reserve has been funded to back Farmer Mac guarantees. Sfmt 3604 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV 1212 THE BUDGET FOR FISCAL YEAR 2003 FARM CREDIT SYSTEM—Continued (FARMER MAC)—Continued FEDERAL HOME LOAN BANK SYSTEM GUARANTEES FEDERAL HOME LOAN BANKS 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’’. 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 the supervision, examination of and rulemaking for Farmer Mac. Status of Guaranteed Loans (in millions of dollars) 2001 actual Identification code 99–4180–0–3–351 2002 est. 2003 est. 2131 Guaranteed loan commitments ..................................... 2,597 2,306 1,000 2150 Total guaranteed loan commitments ............................ 2,597 2,306 1,000 2210 2231 2251 Cumulative balance of guaranteed loans outstanding: Outstanding, start of year ............................................. Disbursements of new guaranteed loans ...................... Repayments and prepayments ...................................... 3,318 2,597 ¥1,021 4,894 2,306 ¥1,200 6,000 1,000 ¥1,000 2290 Outstanding, end of year .......................................... 4,894 6,000 6,000 2299 Memorandum: Guaranteed amount of guaranteed loans outstanding, end of year ................................................................ 4,894 6,000 6,000 Statement of Operations (in millions of dollars) Identification code 99–4180–0–3–351 2000 actual 2001 actual 2002 est. 2003 est. 0101 0101 0101 0102 Revenue: Net Interest Income ................................. Guarantee Fee Income ............................. Gain on Security Issuance ...................... Expense .................................................... 18 8 .................. –18 22 10 .................. –23 25 12 .................. –27 25 12 .................. –27 0105 Net income or loss (–) ............................ 8 9 10 10 0199 Total comprehensive income ................... 8 9 10 10 Balance Sheet (in millions of dollars) 2000 actual 2001 actual 853 3 15 853 4 18 853 4 18 853 4 18 1,598 37 1,998 46 2,198 55 2,198 55 1,635 476 2,044 89 2,253 100 2,253 100 Total assets ........................................ LIABILITIES: 2201 Accounts payable .................................... 2202 Interest payable ....................................... 2203 Debt ......................................................... 2204 Liabilities for loan guarantees ................ 2,982 3,008 3,228 3,228 4 15 2,861 7 6 18 2,870 9 7 21 3,074 11 7 21 3,064 11 2999 2,887 2,903 3,113 3,103 95 105 115 125 Identification code 99–4180–0–3–351 ASSETS: 1201 Investment in securities .......................... 1206 Receivables, net ...................................... 1207 Advances and prepayments .................... Net value of assets related to direct loans receivable: 1401 Direct loans receivable, gross ............ 1402 Interest receivable .............................. 1499 1801 Net present value of assets related to direct loans ........................... Cash and other monetary assets ............ 1999 Total liabilities .................................... NET POSITION: 3300 Invested capital ....................................... 2002 est. 2003 est. 3999 Total net position ................................ 95 105 115 125 4999 Total liabilities and net position ............ 2,982 3,008 3,228 3,228 PO 00000 Frm 00008 Fmt 3604 VerDate 11-MAY-2000 11:15 Jan 25, 2002 Jkt 189685 Status of Direct Loans (in millions of dollars) 2001 actual Identification code 99–4200–0–3–371 2002 est. 2003 est. 1131 Direct loan obligations ..................................... 4,144,928 4,144,928 4,144,928 1150 Total direct loan obligations ............................ 4,144,928 4,144,928 4,144,928 1210 1231 1251 Cumulative balance of direct loans outstanding: Outstanding, start of year ............................... Disbursements: Direct loan disbursements ..... Repayments: Repayments and prepayments ... 444,505 4,144,928 –4,100,020 489,413 4,144,928 –4,144,928 489,413 4,144,928 –4,144,928 1290 Outstanding, end of year ............................. 489,413 489,413 489,413 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 7,897 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 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, 2001 totaled approximately $467 billion, a net increase of approximately $37 billion from the September 30, 2000 level of $430 billion. The principal source of funds for the lending operation is the sale of consolidated obligations to the public. On September 30, 2001, $611 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 $29 billion and total capital amounted to $33 billion as of September 30, 2001. 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 net income. The Act, as amended in 1999, also requires that the FHLBanks contribute 20 percent Sfmt 3604 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV GOVERNMENT-SPONSORED ENTERPRISES FEDERAL HOME LOAN BANK SYSTEM—Continued of net earnings annually to assist in the payment of interest on bonds issued by the Resolution Funding Corporation. The forecast data for 2002 and 2003 contained in this material represents estimates and should not be construed as an official forecast of the FHLBanks System’s future position. 1401 Statement of Operations (in millions of dollars) 1999 1801 1803 1901 Net value of assets related to direct loans receivable: Direct loans receivable, gross .......................................... Cash and other monetary assets ............ Property, plant and equipment, net ........ Other assets ............................................ 1213 444,505 410 119 204 489,413 1,013 126 3,712 489,413 1,013 126 3,712 489,413 1,013 126 3,712 0101 0102 0105 Revenue ................................................... Expense (includes payments to REFCORP) ............................................ Net income or loss (–) ............................ 2000 actual 2001 actual 36,461 36,404 2002 est. 36,404 2003 est. 36,404 –34,239 –34,312 –34,282 –34,282 2,222 2,092 2,122 2,122 Balance Sheet (in millions of dollars) Identification code 99–4200–0–3–371 ASSETS: Investments in US securities: 1102 Treasury securities, net ...................... 1201 Investments in other securities, net ....... 1206 Accounts receivable ................................. VerDate 11-MAY-2000 11:15 Jan 25, 2002 2000 actual 232 177,913 10,583 Jkt 189685 2001 actual 2002 est. 2003 est. 206 193,470 3,248 206 193,470 3,248 206 193,470 3,248 PO 00000 Frm 00009 Fmt 3604 633,966 691,188 691,188 691,188 737 91 11,016 577,057 778 .................. 5,538 611,338 778 .................. 5,538 611,338 778 .................. 5,538 611,338 869 13,617 10,839 29,571 10,839 29,571 10,839 29,571 2999 Identification code 99–4200–0–3–371 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 ................................................... 603,387 658,064 658,064 658,064 Total liabilities .................................... NET POSITION: 3100 Invested capital ....................................... 30,579 33,124 33,124 33,124 3999 Total net position ................................ 30,579 33,124 33,124 33,124 4999 Total liabilities and net position ............ 633,966 691,188 691,188 691,188 Sfmt 3633 E:\BUDGET\GOV.XXX pfrm11 PsN: GOV