FINANCING VEHICLES AND THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE

This chapter contains descriptions of and data on financing vehicles and the Board of Governors of the Federal Reserve. The Financing Corporation functions as a financing vehicle for the Federal Savings and Loan Insurance Corporation (FSLIC) Resolution Fund. The Resolution Funding Corporation provided financing for the Resolution Trust Corporation (RTC) and is subject to the general oversight and direction of the Secretary of the Treasury.

The Board of Governors of the Federal Reserve System's transactions are not included in the Budget because of its unique status in the conduct of monetary policy. The Board provides data on its administrative budget, which is included here for information. Its budget schedules and statements are not subject to review by the President.

Amounts are on a calendar year basis, with the exception of the 2009 balance sheets for the Financing Corporation and Resolution Funding Corporation, which are as of September 30, 2009.

Federal Funds

Financing Corporation

The Financing Corporation (FICO) is a mixed-ownership Government corporation, chartered by the Federal Home Loan Bank Board pursuant to the Federal Savings and Loan Insurance Corporation Recapitalization Act of 1987, as amended (Act). FICO's sole purpose is to function as a financing vehicle for the FSLIC Resolution Fund, formerly the Federal Savings and Loan Insurance Corporation. Pursuant to the Act, FICO was authorized to issue debentures, bonds, and other obligations subject to limitations contained in the Act, the net proceeds of which were to be used solely to purchase capital certificates issued by the FSLIC Resolution Fund, or to refund any previously issued obligations. The Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991 terminated FICO's borrowing authority.

The Act provided formulas pursuant to which the Federal Home Loan Banks make capital contributions to FICO. FICO used the proceeds received from the sales of such capital stock to purchase non-interest bearing securities for deposit in a segregated account as required by the Act. The non-interest bearing securities held in the segregated account are the primary source of repayment of the principal of FICO obligations. Securities in the segregated account are kept separate from other FICO accounts and funds, but are not specifically pledged as collateral for the payment of obligations. The primary source of payment of interest on the obligations is the receipt of assessments imposed on and collected from institutions' accounts which are insured by the Federal Deposit Insurance Corporation's Deposit Insurance Fund.

Balance Sheet (in millions of dollars)
Identification code 99–4033–0–3–373 2009 actual 2010 actual
ASSETS:
Federal assets: Investments in US securities:
1102 Segregated accounts investment, net 4,189 4,465
Other Federal assets:
1801 Cash, cash equivalents 204 287
1901 Other assets 10 9
1999 Total assets 4,403 4,761
LIABILITIES:
Non-Federal liabilities:
2202 Interest payable 156 235
2203 Debt 8,147 8,149
2207 Other 80 82
2999 Total liabilities 8,383 8,466
NET POSITION:
3100 FICO capital stock purchased by FHLBanks 680 680
3300 Cumulative results of operations 3,510 3,785
3300 FSLIC capital certificates –8,170 –8,170
3999 Total net position –3,980 –3,705
4999 Total liabilities and net position 4,403 4,761

Resolution Funding Corporation

The Resolution Funding Corporation (REFCORP) is a mixed-ownership Government corporation established by Title V of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The sole purpose of REFCORP was to provide financing for the Resolution Trust Corporation (RTC). Pursuant to FIRREA, REFCORP was authorized to issue debentures, bonds, and other obligations, subject to limitations contained in the Act and regulations established by the Thrift Depositor Protection Oversight Board. The proceeds of the debt (less any discount, plus any premium, net of issuance cost) were used solely to purchase nonredeemable capital certificates of RTC or to refund any previously issued obligations.

Until October 29, 1998, REFCORP was subject to the general oversight and direction of the Thrift Depositor Protection Oversight Board. At that time, the Oversight Board was abolished and its authority and duties were transferred to the Secretary of the Treasury. The day-to-day operations of REFCORP are under the management of a three-member Directorate comprised of the Director of the Office of Finance of the Federal Home Loan Banks and two members selected from among the presidents of the 12 Federal Home Loan Banks (FHLBanks). Members of the Directorate serve without compensation, and REFCORP is not permitted to have any paid employees.

FIRREA, as amended, and the regulations adopted by the Thrift Depositor Protection Oversight Board and the Secretary of the Treasury provide formulas pursuant to which the Federal Home Loan Banks made capital contributions to REFCORP's Principal Fund and continue to make interest payments on outstanding REFCORP obligations. FIRREA also provides that the U.S. Treasury cover any interest shortfall. Funds designated for the Principal Funds were used to purchase zero-coupon bonds. The zero-coupon bonds are held in the Principal Fund and are the primary source of repayment of the principal of the obligations at maturity.

Balance Sheet (in millions of dollars)
Identification code 99–4029–0–3–373 2009 actual 2010 actual
ASSETS:
Federal assets: Investments in US securities:
1102 Principal fund account investment, net 10,815 11,463
1206 Non-Federal assets: Assessments receivable for interest expense 886 888
1999 Total assets 11,701 12,351
LIABILITIES:
Non-Federal liabilities:
2202 Accrued interest payable on long-term obligations 886 888
2203 Debt 30,074 30,073
2999 Total liabilities 30,960 30,961
NET POSITION:
3100 Nonvoting capital stock issued to FHLBanks 2,513 2,513
3300 Cumulative results of operations 8,458 9,107
3300 RTC nonredeemable capital certificates –31,286 –31,286
3300 Contributed capital - principal fund assessments 1,056 1,056
3999 Total net position –19,259 –18,610
4999 Total liabilities and net position 11,701 12,351

Board of Governors of the Federal Reserve System

Program and Financing (in millions of dollars)
Identification code 99–4450–0–3–803 2009 actual 2010 est. 2011 est.
Obligations by program activity:
0801 Monetary and economic policy 88 96 106
0802 Federal Reserve System policy direction 33 37 38
0803 Supervisory, regulatory, and legal services 131 139 155
0804 Support and security services 133 143 171
0805 Extraordinary items 5 10 1
0809 Reimbursable program activities, subtotal 390 425 471
0810 Office of Inspector General operating expenses 7 19 18
0900 Total new obligations 397 444 489
Budgetary Resources:
Financing authority:
Spending authority from offsetting collections, mandatory:
1800 Collected 397 444 489
1930 Total budgetary resources available 397 444 489
Change in obligated balance:
3030 Obligations incurred, unexpired accounts 397 444 489
3040 Financing disbursements (gross) –397 –444 –489
Financing authority and disbursements, net:
Mandatory:
4090 Financing authority, gross 397 444 489
4110 Financing disbursements, gross 397 444 489
Offsets against gross financing authority and disbursements:
Offsetting collections (collected) from:
4123 Non-Federal sources –397 –444 –489
4160 Financing authority, net (mandatory)
4170 Financing disbursements, net (mandatory)
4180 Financing authority, net (total)
4190 Financing disbursements, net (total)

The Federal Reserve System operates under the provisions of the Federal Reserve Act of 1913, as amended, and other acts of the Congress.

To carry out its responsibilities under this Act, the Board determines general monetary, credit, and operating policies for the System as a whole and formulates the rules and regulations necessary to carry out the purposes of the Federal Reserve Act. The Board's principal duties consist of exerting an influence over credit conditions and supervising the Federal Reserve banks and member banks.

Under the provisions of section 10 of the Federal Reserve Act, the Board of Governors levies upon the Federal Reserve banks, in proportion to their capital and surplus, an assessment sufficient to pay its estimated expenses. The Board, under this Act, determines and prescribes the manner in which its obligations are incurred and its expenses paid. Funds derived from assessments are deposited in the Federal Reserve Bank of Richmond, and this Act provides that such funds "not be construed to be Government funds or appropriated moneys.'' No Government appropriation is required to support operations of the Board.

The information presented pertains to Board operations only. Expenditures made on behalf of the Federal Reserve banks for production, issuance, retirement, and shipment of Federal Reserve notes are not included, since they are reimbursed in full by the Federal Reserve banks.

Object Classification (in millions of dollars)
Identification code 99–4450–0–3–803 2009 actual 2010 est. 2011 est.
Reimbursable obligations:
Personnel compensation:
11.1 Full-time permanent 239 256 255
11.3 Other than full-time permanent 3 3 3
11.5 Other personnel compensation 2 2 2
11.9 Total personnel compensation 244 261 260
12.1 Civilian personnel benefits 44 53 53
13.0 Benefits for former personnel 6 6 6
21.0 Travel and transportation of persons 11 11 11
22.0 Transportation of things 1
23.3 Communications, utilities, and miscellaneous charges 9 8 8
24.0 Printing and reproduction 3 2 2
25.1 Advisory and assistance services 3 4 4
25.2 Other services from non-federal sources 51 71 71
26.0 Supplies and materials 11 11 11
31.0 Equipment 15 17 17
99.0 Reimbursable obligations 397 444 444
99.9 Total new obligations 397 444 444