Fort Walton Beach Council agenda — 01-08-13--regular — reading text

sponsored/ owned entity created by the U. S. Congress, generally for the purpose of m acting as a financial intermediary by borrowing in the marketplace and directing proceeds to specific areas of the G economy considered to otherwise have restricted access to credit markets. The largest Federal Agencies are GNMA, FNMA, FHLMC, FHLB, FFCB, SLMA, and TVA. Federal Deposit Insurance Corporation ( FDIC). Federal agency that insures deposits at commercial banks, currently to a limit of $250, 000 per depositor per bank. Federal Farm Credit Bank ( FFCB). One of the large Federal Agencies. A government sponsored enterprise GSE) system that is a network of cooperatively -owned lending institutions that provides credit services to Ordinance 1875, Adopted raasary& 2013 Packet Pg. 69  t2a. b City of Fort Walton Beach, FL INVESTMENT POLICY farmers, agricultural cooperatives and rural utilities. The FFCBs act as financial intermediaries that borrow money in the capital markets and use the proceeds to make loans and provide other assistance to farmers and farm -affiliated businesses. Consists of the consolidated operations of the Banks for Cooperatives, Federal Intermediate Credit Banks, and Federal Land Banks. Frequent issuer of discount notes, agency notes and callable agency securities. FFCB debt is not an obligation of, nor is it guaranteed by the U. S. government, although it is considered to have minimal credit risk due to its importance to the U. S. financial system and agricultural industry. Also issues notes under its " designated note" program. Federal Funds ( Fed Funds). Funds placed in Federal Reserve Banks by depository institutions in excess of current reserve requirements, and frequently loaned or borrowed on an overnight basis between depository institutions. Federal Funds Rate ( Fed Funds Rate). The interest rate charged by a depository institution lending Federal Funds to another depository institution. The Federal Reserve influences this rate by establishing a " target" Fed Funds rate associated with the Fed' s management of monetary policy. Federal Home Loan Bank System ( FHLB). One of the large Federal Agencies. A government sponsored m enterprise ( GSE) system, consisting of wholesale banks ( currently twelve district banks) owned by their member e banks, which provides correspondent banking services and credit to various financial institutions, financed by the issuance of securities. The principal purpose of the FHLB is to add liquidity to the mortgage markets. Although n m FHLB does not directly fund mortgages, it provides a stable supply of credit to thrift institutions that make new mortgage loans. FHLB debt is not an obligation of, nor is it guaranteed by the U. S. government, although it is N considered to have minimal credit risk due to its importance to the U. S. financial system and housing market. Frequent issuer of discount notes, agency notes and callable agency securities. Also issues notes under its " global note" and " TAP" programs. ^ Federal Home Loan Mortgage Corporation ( FHLMC or " Freddie Mac "). One of the large Federal Agencies. A government sponsored public corporation ( GSE) that provides stability and assistance to the secondary market for home mortgages by purchasing first mortgages and participation interests financed by the sale of debt and guaranteed mortgage backed securities. FHLMC debt is not an obligation of, nor is it guaranteed by the U. S. government, although it is considered to have minimal credit risk due to its importance to the U. S. financial system and housing market. Frequent issuer of discount notes, agency notes, callable agency securities and MBS. Also issues notes under its " reference note" program. Federal National Mortgage Association ( FNMA or " Fannie Mae "). One of the large Federal Agencies. A govermnent sponsored public corporation ( GSE) that provides liquidity to the residential mortgage market by purchasing mortgage loans from lenders, financed by the issuance of debt securities and MBS ( pools of mortgages packaged together as a security). FNMA debt is not an obligation of, nor is it guaranteed by the U. S. government, although it is considered to have minimal credit risk due to its importance to the U. S. financial system and housing market. Frequent issuer of discount notes, agency notes, callable agency securities and MBS Also issues notes under its " benchmark note" program. Federal Reserve Bank. One of the 12 distinct banks of the Federal Reserve System. Federal Reserve System ( the Fed). The independent central bank system of the United States that establishes and conducts the nation' s monetary policy. This is accomplished in three major ways: ( 1) raising or lowering bank reserve requirements, ( 2) raising or lowering the target Fed Funds Rate and Discount Rate, and ( 3) in open market operations by buying and selling government securities. The Federal Reserve System is made up of twelve Federal Reserve District Banks, their branches, and many national and state banks throughout the nation. It is headed by the seven member Board of Governors known as the " Federal Reserve Board" and headed by its Chairman. Financial Industry Regulatory Authority, Inc ( FINRA). is a private corporation that acts as a self-regulatory organization ( SRO). FINRA is the successor to the National Association of Securities Dealers, Inc. ( NASD). Though sometimes mistaken for a government agency, it is a non -governmental organization that performs omi" asre 1875. Adopted January s, 2013 Paekat Pg. 70  12. 1. b City of Fort Walton Beach, FL INVESTMENT POLICY financial regulation of member brokerage firms and exchange markets. The government also has a regulatory arm for investments, the Securities and Exchange Commission. Fiscal Agent/ Paying Agent. A bank or trust company that acts, under a tmst agreement with a corporation or municipality, in the capacity of general treasurer. The agent performs such duties as making coupon payments, paying rents, redeeming bonds, and handling taxes relating to the issuance of bonds. Fitch Investors Service, Inc. One of several NRSROs that provide credit ratings on corporate and municipal debt issues. ama Floating Rate Security ( FRN or " floater "). A bond with an interest rate that is adjusted according to changes in an interest rate or index. Differs from variable -rate debt in that the changes to the rate take place immediately when the index changes, rather than on a predetermined schedule. See also " Variable Rate Security." u Q0. Freddie Mac. See " Federal Home Loan Mortgage Corporation'. ca Ginnie Mae. See " Government National Mortgage Association'. E Nd Global Notes: Notes designed to qualify for immediate trading in both the domestic U.S. capital market and in foreign markets around the globe. Usually large issues that are sold to investors worldwide and therefore have excellent liquidity. Despite their global sales, global notes sold in the U. S. are typically denominated in U. S. m dollars. N Government National Mortgage Association ( GNMA or " Ginnie Mae "). One of the large Federal Agencies. Goverment -owned Federal Agency that acquires, packages, and resells mortgages and mortgage purchase commitments in the form of mortgage- backed securities. Largest issuer of mortgage pass -through securities. GNMA debt is guaranteed by the full faith and credit of the U. S. government ( one of the few agencies that is actually full faith and credit of the U. S.). Government Securities. An obligation of the U. S. government, backed by the full faith and credit of the nm° government. These securities are regarded as the highest quality of investment securities available in the U.S. v securities market. Sec " Treasury Bills, Notes, Bonds, and SLGS." Government Sponsored Privately owned entity subject to federal regulation and Enterprise ( GSE). a supervision, created by the U. S. Congress to reduce the cost of capital for certain borrowing sectors of the m E economy such as students, farmers, and homeowners. GSEs carry the implicit backing of the U. S. Government, but they are not direct obligations of the U. S. Government. For this reason, these securities will offer a yield y premium over U. S. Treasuries. Some consider GSEs to be stealth recipients of corporate welfare. Examples of GSEs include: FHLB, FHLMC, FNMA and SLMA. m Government Sponsored Enterprise Security. A security issued by a Goverment Sponsored Enterprise. N Considered Federal Agency Securities. Index. A compilation of statistical data that tracks changes in the economy or in financial markets. Interest -Only ( 10) STRIP. A security based solely on the interest payments from the bond. After the principal E has been repaid, interest payments slop and the value of the security falls to nothing. Therefore, IOs are considered risky investments. Usually associated with mortgage -backed securities. Internal Controls. An internal control structure ensures that the assets of the entity are protected from loss, theft, or misuse. The internal control structure is designed to provide reasonable assurance that these objectives are met. The concept of reasonable assurance recognizes that 1) the cost of a control should not exceed the benefits likely to be derived and 2) the valuation of costs and benefits requires estimates andjudgments by management. Internal controls should address the following points: L Control of collusion - Collusion is a situation where two or more employees are working in conjunction to defraud their employer. O, din., c 1875,