to lower market risk. Of the $6.56 billion
investment balance at September 30, 2001,
$440.4 million was held in overnight certifi-
cates. The balance of the portfolios maturi-
ties are spread over time to ensure that Ginnie
Mae has a ready source of funds to meet vari-
ous liquidity needs. Emergency liquidity
needs are met through short-term maturities.
The following chart illustrates the compo-
nents of Ginnie Maes Investments in U.S.
Government Securities at September 30, 2001:
Components of Investment in
U.S. Government Securities
Fiscal Year 2001
U.S. Treasury Notes
93%
U.S. Treasury
Overnight Securities
7%
Capital Adequacy
Ginnie Maes activities involving the guaranty
of MBS have historically operated at a profit.
Ginnie Mae has never had to exercise its
authority to borrow funds from the U.S.
Treasury to finance its operations. Ginnie
Maes net income continues to build and
strengthen the Corporations capital base and
programs. Ginnie Mae believes it maintains
adequate capital to withstand downturns in
the housing market that could cause severe
issuer defaults. Ginnie Maes capital is backed
by the full faith and credit guaranty of the
United States Government.
As of September 30, 2001, Ginnie Mae had
an Investment of U.S. Government balance
of $8.1 billion after establishing reserves for
losses on its credit activities, compared with
$7.3 billion as of September 30, 2000. Ginnie
Maes net earnings are used to build reserves
which it believes to be sound. Over the past
three years, Ginnie Mae has increased its
capital adequacy ratio (Investment of U.S.
Government plus loan loss reserve as a per-
centage of total assets and RPB) from 1.28
percent to 1.41 percent. To assess the strength
of its capital position, Ginnie Mae uses a
stress test methodology that measures
Ginnie Maes ability to withstand severe
economic conditions.
The following chart describes Ginnie Maes
Capital Reserves (Investment of U.S.
Government) at September 30 for the last
five years:
Capital Reserves
(Investment of U.S. Government)
Fiscal Year
Dollars in Millions
1997
$5,135
1998
$5,809
1999
$6,556
2000
$7,319
2001
$8,124
Risk Management
Ginnie Mae continues to enhance its automat-
ed systems and business processes to increase
the efficiency of its operations and to reduce
its business risk. During Fiscal Year 2001,
Ginnie Mae continued periodic reviews of all
master subservicers and major contractors to
assure compliance with the terms and condi-
tions of their contracts with Ginnie Mae.
Additionally, the audits and reviews provided
Ginnie Mae with a mechanism for continuing
to strengthen its internal controls and mini-
mize risks.
Compliance with the CFO Act
Ginnie Mae has prepared a separate manage-
ment report in compliance with the Chief
Financial Officers Act of 1990 that contains
detailed information. It is available upon
request from the Ginnie Mae Office of
Finance at (202) 401-2064.
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G i n n i e M a e A n n u a l R e p o r t 2 0 0 1