The Federal intermediate credit banks, of which there are 12, are under the general supervision of the Farm Credit Administration. They serve as banks of discount for agriculture, discounting agricultural and livestock paper for local financing institutions, such as production credit associations, agricultural credit corporations, livestock loan companies, and commercial banks. They also provide the production credit associations with necessary supervision and services. During 1965, the banks extended credit totaling $4.9 billion.

The banks' lending funds are obtained primarily from the sale of debentures to the public and from their own capital funds. The debentures are not guaranteed by the U.S. Government either as to principal or interest.

The banks were originally wholly owned Government corporations set up exclusively as banks of discount; however, pursuant to the Farm Credit Act of 1956, the banks became mixed-ownership corporations and were made responsible for supervising the production credit associations and assisting them to make sound credit available to farmers.

All of the capital stock of the Federal intermediate credit banks 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. However, because of the increased credit demands placed upon the Federal intermediate credit banks, it has been necessary for the Government to invest additional capital in the banks in order to keep the debtto-capital ratios within the 10-to-1 maximum permitted by law. At June 30, 1965, the U.S. Government's investment in the capital stock of the banks was $123 million and that of private interests was $69 million.

Public Law No. 89-237 enacted on October 4, 1965, increased the maximum debt to capital ratios of the credit banks to 12 to 1. As a result of this change, it is

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1 No provision is made in this report for expenses which might be incurred by reason of additional bank closings after Sept. 30, 1965, because there is no sound basis for predicting which, if any, insured banks will close in the future. 2 Balances of selected resources are identified in the statement of financial condition.

In order to protect depositors in insured banks, the Federal Deposit Insurance Corporation is authorized to insure such depositors in the maximum amount of $10 thousand to examine all insured banks not members of the Federal Reserve System and, in certain situations for insurance purposes, to examine National and State chartered banks which are members of the Federal Reserve System; to participate in the regulation of mergers involving insured banks; and to promulgate and enforce rules and regulations relating to the supervision of insured banks, the withdrawal of deposit insurance, and other regulatory and supervisory matters consistent with its responsibility as insurer.

The income of the Corporation is derived principally from insurance assessments paid by insured banks and interest on investments in U.S. Government securities. No funds derived from taxes or Federal appropriations are allocated to or used by the Corporation. There is no

(1)

(1)

OTHER INDEPENDENT AGENCIES-Continued

Financial Condition (in thousands of dollars)—Continued

FEDERAL DEPOSIT INSURANCE CORPORATION-Con.

capital stock outstanding. The Corporation is authorized to borrow from the U.S. Treasury and the Secretary of the Treasury is authorized and directed to loan to the Corporation, on such terms as may be fixed by the Corporation and the Secretary, not to exceed $3 billion outstanding when, in the judgment of the Board of Directors of the Corporation, such funds are required for insurance purposes (see schedule in pt. I of the appendix). No borrowings under this authorization have been made to date and none are anticipated in 1966 or 1967.

The deposit insurance fund, representing the accumulated net income of the Corporation, is reserved for the payment of insured deposits and for the payment of its operating and insurance expenses. The estimates shown for 1966 and 1967 in these statements make no provision for losses or expenses which might be incurred by reason of the closing of any bank after September 30, 1965 (the date on which these reports were prepared) because there is no basis for predicting which, if any, insured banks will close in the future.

Total Government equity... 2,756,494 2,936,410 3,135,033 3,340,398

1 The changes in these items are reflected in the program and financing schedule. Represents the deposit insurance fund, reserved for payment of insurance losses and administrative and other expenses.