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FEDERAL CREDIT AGENCIES: <br />Agencies of the Federal government setup <br />to supply credit to various classes of <br />institutions and individuals, e.g., small <br />business firms, students, farmers, farm <br />cooperatives, and exporters. <br />FEDERAL DEPOSIT INSURANCE <br />CORPORATION (FDIC): <br />A federal agency that insures bank <br />deposits, currently up to $100,000 per tax <br />identification account. <br />FEDERAL FUNDS RATE: <br />The overnight rate of interest at which Fed <br />funds are traded between banks. This rate <br />is currently pegged by the Federal Reserve <br />through open-market operations. <br />FEDERAL HOME LOAN BANKS <br />(FHLB): <br />Government sponsored wholesale banks <br />(currently 12 regional banks) which lend <br />funds and provide correspondent banking <br />services to member commercial banks, <br />thrift institutions, credit unions and <br />insurance companies. The mission of the <br />FHLBs is to liquefy the housing related <br />assets of its members who must purchase <br />stock in their district Bank. <br />FEDERAL NATIONAL MORTGAGE <br />ASSOCIATION (FNMA or Fannie Mae): <br />Chartered in 193 8, FNMA is a federal <br />corporation, government sponsored <br />enterprise. It is the largest single provider <br />of residential mortgage funds in the United <br />States. Fannie Mae is a private <br />stockholder-owned corporation. The <br />corporation's purchases include a variety of <br />adjustable mortgages and second loans, in <br />addition to fixed-rate mortgages. FNMA's <br />debenture securities are highly liquid and <br />widely accepted. FNMA, not the federal <br />government, guarantees that all security <br />holders will receive timely payment of <br />principal and interest. <br />FEDERAL OPEN MARKET <br />COMMITTEE (FOMC): <br />Consists of seven members of the Federal <br />Reserve Board and five of the twelve <br />Federal Reserve Bank Presidents. The <br />resident of the New York Federal Reserve <br />Bank is a permanent member, while the <br />other Presidents serve on a rotating basis. <br />The Committee periodically meets to set <br />Federal Reserve guidelines regarding <br />purchases and sales of Government <br />Securities in the open market as a means of <br />influencing the volume of bank credit and <br />money. <br />FEDERAL RESERVE SYSTEM: <br />The central bank of the United States <br />created by Congress and consisting of a <br />seven member Board of Governors in <br />Washington, D.C., 12 regional banks and <br />about 5,700 commercial banks that are <br />members of the system. <br />GOVERNMENT NATIONAL <br />MORTGAGE ASSOCIATION (GNMA <br />or Ginnie Mae): <br />U. S . Agency with full faith and credit of <br />the U.S. Government. Ginnie Mae issues <br />only mortgage-backed securities backed by <br />the FHA, VA or FmHA mortgages. The <br />term "pass-through" is often used to <br />describe Ginnie Maes because it creates no <br />derivative mortgage-backed securities. <br />LIQUIDITY: <br />The ability to be converted easily and <br />rapidly into cash. In the money market, a <br />security is said to be liquid if the spread <br />between bid and asked prices is narrow and <br />reasonable size can be done at those <br />quotes. <br />LOCAL GOVERNMENT <br />INVESTMENT POOL (LGIP): <br />Funds from political subdivisions <br />aggregated for investment under the <br />Interlocal Cooperation Act. Pools are <br />structured as constant dollar funds or <br />mutual funds. <br />City of San Marcos Investment Policy Page 10 <br />