Financing Corporation

The Financing Corporation (FICO) is a mixed-ownership United States government-sponsored enterprise that assumed all the assets and liabilities of the insolvent Federal Savings and Loan Insurance Corporation (FSLIC) and operated as a financing vehicle for the FSLIC Resolution Fund after the former was abolished by the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA).[1] As of July 1997 its outstanding debt stood at $8.2 billion.[2] Its bond interest payments are funded by the Deposit Insurance Fund (DIF) premiums of the Federal Deposit Insurance Corporation (FDIC).

History

FICO was chartered by the Federal Home Loan Bank Board pursuant to the Federal Savings and Loan Insurance Corporation Recapitalization Act of 1987.[1][3] FICO's sole purpose was for issuing bonds to finance a rebuilding of the Federal Savings and Loan Insurance Corporation (FSLIC),[4] and after the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) to function as a financing vehicle for the FSLIC Resolution Fund created to assume all the assets and liabilities of the FSLIC. Pursuant to the Recapitalization Act, FICO was authorized to issue debentures, bonds, and other obligations subject to limitations, 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.[1] The Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991 terminated FICO's borrowing authority.[1][5]

After FIRREA, FICO bond payments were to come out of Federal Deposit Insurance Corporation (FDIC) Savings Association Insurance Fund (SAIF) premiums instead of FSLIC premiums.[6] The Deposit Insurance Funds Act of 1996 required Bank Insurance Fund (BIF) members to share the FICO bond interest obligation with the Savings Association Insurance Fund (SAIF) members.[7][8] The Federal Deposit Insurance Reform Act of 2005 merged the BIF and the SAIF into a new fund, the Deposit Insurance Fund (DIF).

Notes

  1. 1 2 3 4 OMB 2010, p. 1337.
  2. ↑ Leggett & Strand 1997, p. 184.
  3. ↑ Federal Savings and Loan Insurance Corporation Recapitalization Act of 1987, Title III of the Competitive Equality Banking Act of 1987, Pub.L. 100–86, 101 Stat. 552, enacted August 10, 1987
  4. ↑ Leggett & Strand 1997, p. 179.
  5. ↑ Resolution Trust Corporation Refinancing, Restructuring, and Improvement Act of 1991, Pub.L. 102–233, 105 Stat. 1761, enacted December 12, 1991
  6. ↑ Leggett & Strand 1997, p. 180.
  7. ↑ Leggett & Strand 1997, p. 182.
  8. ↑ Deposit Insurance Funds Act of 1996, Subtitle G of the Economic Growth and Regulatory Paperwork Reduction Act of 1996, Title II of the 1997 Omnibus Consolidated Appropriations Act, Pub.L. 104–208, 110 Stat. 3009, enacted September 30, 1996

References

  • Leggett, Keith J.; Strand, Robert W. (Fall 1997). "The Financing Corporation, Government-Sponsored Enterprises, and Moral Hazard" (PDF). Cato Journal. Cato Institute. 17 (2).
  • Appendix, Budget of the United States Government, Fiscal Year 2010, Office of Management and Budget (OMB), 2010

See also

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