    [Appendix]
    [Estimates for Government-Sponsored Enterprises]
    [From the U.S. Government Printing Office, www.gpo.gov]

    [[Page 1165]]

                        GOVERNMENT-SPONSORED ENTERPRISES

        This chapter contains descriptions of and data on the Government-
    sponsored enterprises listed below. These enterprises were established
    and chartered by the Federal Government. They are not included in the
    Federal budget because they are classified as being private. However,
    because of their relationship to the Government, detailed statements of
    financial operations and condition are presented, to the extent such
    information is available, on a basis that is as consistent as
    practicable with the basis for the budget data of Government agencies.
    These statements are not reviewed by the President; they are presented
    as submitted by the enterprises.

        --The Student Loan Marketing Association is a for-profit financial
            corporation chartered by Congress in 1972 under the Higher
            Education Act (HEA) to help increase the availability of student
            loans. Sallie Mae carries out secondary market and other
            functions.

        --The College Construction Loan Insurance Association was organized
            as a private, for-profit insurance corporation to guarantee and
            insure bonds and loans made for construction and renovation of
            college and university facilities. Pursuant to legislation
            enacted in 1996, the association was fully privatized in 1997
            and is no longer a Government-sponsored enterprise.

        --The Federal National Mortgage Association provides supplementary
            assistance to the secondary market for home mortgages. The
            Federal Home Loan Mortgage Corporation provides a secondary
            market for mortgage lenders. Both are supervised by the
            Department of Housing and Urban Development for their roles in
            helping to finance low-, moderate-, and middle-income housing;
            both are regulated for financial safety and soundness by the
            Office of Federal Housing Enterprise Oversight.

        --The Banks for Cooperatives, Agricultural Credit Bank, and Farm
            Credit Banks provide financial assistance to agriculture. They
            are supervised by the Farm Credit Administration.

        --The Federal Agricultural Mortgage Corporation, under the
            supervision of the Farm Credit Administration, provides a
            secondary mortgage market for agricultural real estate and
            certain rural housing loans as well as for farm and business
            loans guaranteed by the U.S. Department of Agriculture.

        --The Federal Home Loan Banks assist thrift institutions, banks,
            insurance companies, and credit unions in providing financing
            for housing and community development and are supervised by the
            Federal Housing Finance Board.

        --The Financing Corporation functions as a financing vehicle for the
            FSLIC Resolution Fund. It operates under the supervision and
            control of the Federal Housing Finance Board.

        --The Resolution Funding Corporation provided financing for the
            Resolution Trust Corporation (RTC) and is subject to the general
            oversight and direction of the Thrift Depositor Protection
            Oversight Board.

        The Board of Governors of the Federal Reserve System is not a
    Government-sponsored enterprise, but its transactions also are not
    included in the budget because of its unique status in the conduct of
    monetary policy. The Board provides data on its administrative budget on
    a calendar year basis, which is included here for information. Its
    budget schedules and statements are not subject to review by the
    President.

                             DEPARTMENT OF EDUCATION

                       Student Loan Marketing Association

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-1500-0-3-502      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Interest expense................       2,590       2,461       2,584
    00.02   Administrative expenses and
              taxes.........................         710         586         615
                                               ---------   ---------  ----------
    00.91     Total operating expenses......       3,300       3,047       3,199
          Capital investment:

    01.01   Loans, etc......................      10,019       8,224       8,106
    01.02   Investments, dividends, and
              other assets..................         600         700         650
                                               ---------   ---------  ----------
    01.91     Total capital investment......      10,619       8,924       8,756
                                               ---------   ---------  ----------
    10.00   Total obligations...............      13,919      11,971      11,955
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......      13,919      11,971      11,955
    23.95 New obligations...................     -13,919     -11,971     -11,955
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Authority to borrow (indefinite)..      -4,294      -8,029      -6,045
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      18,213      20,000      18,000
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      13,919      11,971      11,955
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.41 Unpaid obligations, start of year:
            Obligated balance: U.S.
            Securities: Par value, start of
            year............................       1,291       1,382       1,340
    73.10 New obligations...................      13,919      11,971      11,955
    73.20 Total outlays (gross).............     -13,828     -12,013     -11,888
    74.41 Unpaid obligations, end of year:
            Obligated balance: U.S.
            Securities: Par value, end of
            year............................       1,382       1,340       1,407
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      13,828      12,013      11,888
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -18,213     -20,000     -18,000
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      -4,294      -8,029      -6,045
    90.00 Outlays...........................      -4,385      -7,987      -6,112
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-1500-0-3-502      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      10,019       8,224       8,106
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      10,019       8,224       8,106
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      37,391      34,259      28,857
    1231  Disbursements: Direct loan
            disbursements...................      10,019       8,224       8,106
          Repayments:

    1251    Repayments and prepayments......      -4,565      -3,670      -2,596
    1252    Proceeds from loan asset sales
              to the public or discounted...      -8,626     -10,000     -10,000

    [[Page 1166]]

    1264  Write-offs for default: Other
            adjustments, net................          40          44          48
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      34,259      28,857      24,415
    ---------------------------------------------------------------------------

        The Student Loan Marketing Association (Sallie Mae), a shareholder-
    owned corporation, was created by the Education Amendments of 1972 to
    expand funds available for student loans by providing liquidity to
    lenders engaged in the Federal Family Education Loan Program (FFELP),
    formerly the guaranteed student loan program (GSLP).
        Sallie Mae provides liquidity through direct purchase of insured
    student loans from eligible lenders and through warehousing advances,
    which are loans to lenders secured by insured student loans, Government
    or agency securities, or other acceptable collateral. In capital
    shortage areas, Sallie Mae is authorized, at the request of Federal
    officials, to make insured loans directly to students. Sallie Mae is
    authorized to advance funds to State agencies that will provide loans to
    students. Sallie Mae is also authorized to provide a secondary market
    for noninsured loans; to serve as a guarantee agency in support of loan
    availability at the request of the Secretary of Education; to purchase
    and underwrite student loan revenue bonds; to provide certain additional
    services as determined by its board of directors to be supportive of the
    credit needs of students generally; and to provide financing for
    academic facilities and equipment.
        Sallie Mae is authorized by the Health Professions Educational
    Assistance Act of 1976 to provide a secondary market for federally
    insured loans to graduate health professions students.
        Operations.--The forecast data with respect to operations are based
    on certain general economic and specific FFELP loan volume assumptions
    and should not be relied upon as an official forecast of the
    corporation's future business.

                              ANNUAL LOAN ACTIVITY

                            [In millions of dollars]

                                         1997 actual  1998 est.   1999 est.
    Guaranteed student loans:
      Stafford (formerly ``regular''):
        Purchased.......................       7,288       6,622       6,587
        Warehoused......................         668
      PLUS/SLS: Purchased...............         614         554         546
                                        ------------------------------------
          Subtotal, Guaranteed student
            loans.......................       8,570       7,176       7,133
    Health professions loans: Purchased.         127          60           0
    Other...............................       1,322         988         975
                                        ------------------------------------
          Total.........................      10,019       8,224       8,108
                                        ====================================

        Financing.--Between 1974 and early 1982, Sallie Mae borrowed through
    the Federal Financing Bank. The Secretary of Education was authorized by
    the Education Amendments of 1980 to guarantee principal and interest on
    such obligations issued prior to October 1, 1985. Under an agreement
    with the Department of the Treasury reached in early 1981, Sallie Mae
    began borrowing directly in the private capital markets. Its last
    borrowing through the FFB and its last issuance of federally guaranteed
    obligations occurred in January 1982. During the first quarter of 1994,
    Sallie Mae prepaid all of the outstanding FFB debt. Its obligations
    today have certain characteristics, provided by charter, which give them
    ``agency'' status, but they are not federally insured or guaranteed.
        Restructuring.--Pursuant to authority enacted in the Student Loan
    Marketing Association Act of 1996, Sallie Mae shareholders, on July 31,
    1997, approved a plan to reorganize the corporation as a fully private,
    State chartered entity. Under the reorganization, which became effective
    on August 8, 1997, the shares of common stock of the GSE (Student Loan
    Marketing Association) were converted on a one-for-one basis to shares
    of the new Delaware chartered holding company (SLM Holding Corporation).
    The GSE became a wholly owned subsidiary of SLM Holding Corporation.
        The legal status of the GSE's debt obligations, including State tax
    exemptions, are fully preserved. According to the authorizing
    legislation, the GSE must wind down and be liquidated by September 30,
    2008. All obligations of the GSE remaining upon liquidation must be
    placed into a defeasance trust. The GSE's outstanding adjustable rate
    cumulative preferred stock is required to be redeemed prior to such
    date.
        As required by legislation, the shareholders' approval of the
    restructuring plan resulted in the transfer of resources from Sallie Mae
    to the District of Columbia for school facility improvements. The
    District received a total of $41.8 million, of which $36.8 million came
    from the sale of Sallie Mae stock warrants issued to the District, and
    $5 million was a payment from the Association for its decision to retain
    ``Sallie Mae'' as a tradename.
        Note.--The Sallie Mae Board of Directors does not consider it
    appropriate to forecast corporate revenue in a public document since
    such forecasts could be used for speculative purposes.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-1500-0-3-502    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................                      3,808
    0102  Expense...........................                     -3,300
                                            ------------ --------------  ------------  -------------
    0109  Net income........................                        508
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-1500-0-3-502    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Federal assets:

            Investments in US securities:
    1102      Treasury securities, par......       1,281          1,382         1,340          1,407
    1104      Agency securities, par........          10
    1106      Receivables, net..............         852            773           812            853
          Non-Federal assets:

    1201    Investments in non-Federal
              securities, net...............       6,971          5,318         2,671            823
    1206    Receivables, net................         483            436           458            481
    1207    Advances and prepayments........          15             19            20             21
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      37,538         34,384        28,962         24,504
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -147           -125          -105            -89
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      37,391         34,259        28,857         24,415
          Other Federal assets:

    1801    Cash and other monetary assets..          35             91            95            100
    1803    Property, plant and equipment,
              net...........................         246            211           221            232
    1901    Other assets....................         100            572           600            630
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      47,384         43,061        35,074         28,962
        LIABILITIES:
          Non-Federal liabilities:

    2202    Interest payable................         472            468           491            516
    2203    Debt............................      45,252         40,230        32,642         26,582
    2207    Other...........................         643          1,110         1,166          1,224
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      46,367         41,808        34,299         28,322
        NET POSITION:
    3200  Invested capital..................       1,017          1,253           775            640
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       1,017          1,253           775            640
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      47,384         43,061        35,074         28,962
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-1500-0-3-502      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Full-time
            permanent.......................          63          46          41

    [[Page 1167]]

    12.1  Civilian personnel benefits.......          16          12          11
    21.0  Travel and transportation of
            persons.........................           5           4           4
    23.3  Communications, utilities, and
            miscellaneous charges...........          17          12          11
    25.1  Advisory and assistance services..          22          16          14
    25.2  Other services....................         357         256         230
    31.0  Equipment.........................           4           3           3
    33.0  Loans.............................      10,019       8,224       8,106
    43.0  Interest, dividends, and taxes....       3,416       3,398       3,535
                                               ---------   ---------  ----------
    99.9    Total obligations...............      13,919      11,971      11,955
    ---------------------------------------------------------------------------

                 College Construction Loan Insurance Association

        The College Construction Loan Insurance Association (Connie Lee) was
    authorized by Public Law 99-498 on October 17, 1986. The Corporation was
    created to insure and reinsure bonds and loans of educational
    institutions which borrow funds to finance the acquisition,
    construction, or renovation of their facilities. The Association was
    incorporated in February 1987, under the District of Columbia Business
    Corporation Act.
        Connie Lee's authorizing statute stated that ``no obligation which
    is insured, guaranteed, or otherwise backed by the corporation, shall be
    deemed to be an obligation which is guaranteed by the full faith and
    credit of the United States.''
        Operations.--Connie Lee was structured to operate as a private
    corporation, subject to the same state laws and regulations as any other
    insurance company. Accordingly, Connie Lee secured insurance licenses in
    each of the various states in which it planned to conduct its insurance
    activities.
        The Board of Directors authorized management to begin activities as
    a reinsuror of educational facilities bonds in 1988. Connie Lee
    reinsured its first bonds in December 1988. In the portion of fiscal
    year 1997 ending February 27, 1997 (date of stock sale for
    privatization), Connie Lee insured $390.2 million of debt service on
    bonds benefitting colleges, universities and teaching hospitals. Connie
    Lee also provided reinsurance on bonds representing $0.9 million of debt
    service.

                      INSURANCE AND REINSURANCE ACTIVITY

                                                        [In thousands of
                                                            dollars]
                                                          1997 actual
    Debt service insured:
     Direct insurance.................................             390,209
     Reinsurance......................................                 899
                                                      --------------------

       Total..........................................             391,108

        Financing.--In order to provide capitalization, the Secretary of
    Education, the Student Loan Marketing Association (Sallie Mae), and
    other investors were authorized to purchase stock in the corporation.
    Sallie Mae made an initial investment of $2 million in Connie Lee stock
    in fiscal year 1987. The Secretary of Education purchased $19.1 million
    in Connie Lee stock with funds appropriated for this purpose in fiscal
    year 1988. Subsequently, the corporation sold an additional $50.9
    million of equity securities to Sallie Mae, increasing total capital of
    the corporation to $72.0 million. At the end of 1991, Connie Lee placed
    equity securities with private investors, providing sufficient
    incremental capital to obtain a triple-A credit rating necessary to
    engage in the financial guaranty business as a direct writer of
    insurance.
        Management.--Connie Lee was governed by an eleven-member board of
    directors comprised of two directors appointed by the Secretary of the
    Treasury; two directors appointed by the Secretary of Education; three
    directors appointed by the Student Loan Marketing Association; and four
    directors elected by the corporation's shareholders, one of whom was
    required to be an administrator of a college or university.
        Privatization.--Legislation was enacted in 1996 that privatized
    Connie Lee by repealing its enabling legislation and requiring the
    Federal Government to sell, and Connie Lee to purchase, the
    corporation's federally owned stock. This sale was completed on February
    27, 1997, and the $18.3 million of proceeds were used to finance public
    elementary and secondary school facility construction and repair within
    the District of Columbia. Data on the corporation's financial position
    at the time of the stock sale is shown below.
        The corporation will continue to insure debt of educational
    institutions, including Historically Black Colleges and Universities and
    academic institutions that have lower investment-grade credit ratings.
    Without the Federal restrictions previously imposed by legislation, the
    corporation will be able to guarantee bonds in other market sectors and
    diversify into new products and services.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-9931-0-3-502    1996 actual   1997 actual*     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Federal assets:

            Investments in US securities:
    1102      Treasury securities, par......          42             47
    1104      Agency securities, par........          21             10
          Non-Federal assets:

    1201    Investments in non-Federal
              securities, net...............         155            166
    1206    Receivables, net................           9
    1207    Advances and prepayments........          37             39
          Other Federal assets:

    1801    Cash and other monetary assets..           3              3
    1803    Property, plant and equipment,
              net...........................           1              1
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................         268            266
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............           9             28
    2201  Non-Federal liabilities: Accounts
            payable.........................          94             86
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............         103            114
        NET POSITION:
    3200  Invested capital..................         165            152
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............         165            152
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position         268            266
    -----------------------------------------------------------------------------------------------
        * Data reflects financial position on February 27, 1997.

                   DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

                      Federal National Mortgage Association

                                 portfolio programs

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2500-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Interest on borrowings from the
              public........................      21,847      24,348      27,592
    00.02   Other costs.....................       3,172       3,018       3,053
                                               ---------   ---------  ----------
    00.91     Total operating expenses......      25,019      27,366      30,645
          Capital investment:

    01.01   Mortgage purchases and loans....      65,206      80,123      87,593
    01.02   Lease-Purchase Discounts........         302
                                               ---------   ---------  ----------
    01.91     Total capital investment......      65,508      80,123      87,593
                                               ---------   ---------  ----------
    10.00   Total obligations...............      90,528     107,489     118,238
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......     464,644     498,942     509,435
    22.00 New budget authority (gross)......     124,826     117,982     152,589
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......     589,470     616,924     662,024
    23.95 New obligations...................     -90,528    -107,489    -118,238
    24.40 Unobligated balance available, end
            of year: Uninvested.............     498,942     509,435     543,786
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.10 Authority to borrow...............      61,390      76,295     118,069

    [[Page 1168]]

    67.15 Net increase or decrease in
            unlimited borrowing authorities.          -4
                                               ---------   ---------  ----------
    67.90   Authority to borrow (total).....      61,386      76,295     118,069
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      63,440      41,687      34,520
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................     124,826     117,982     152,589
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Total........       6,866       9,057       4,684
    73.10 New obligations...................      90,528     107,489     118,238
    73.20 Total outlays (gross).............     -88,337    -111,862    -117,601
    74.40 Unpaid obligations, end of year:
            Obligated balance: Total........       9,057       4,684       5,321
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      63,440      41,687      34,520
    86.98 Outlays from permanent balances...      24,897      70,175      83,081
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........      88,337     111,862     117,601
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

            Offsetting collections (cash)
                from:
    88.00     Federal sources...............        -130        -130        -130
    88.40     Non-Federal sources...........     -63,310     -41,557     -34,390
                                               ---------   ---------  ----------
    88.90       Total, offsetting
                  collections (cash)........     -63,440     -41,687     -34,520
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      61,386      76,295     118,069
    90.00 Outlays...........................      24,897      70,175      83,081
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2500-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      60,971      80,344      88,484
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      60,971      80,344      88,484
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     293,037     321,711     366,030
          Disbursements:

    1231    Direct loan disbursements.......      60,290      79,623      87,093
    1232    Purchase of loans assets from
              the public....................       4,916         500         500
    1251  Repayments: Repayments and
            prepayments.....................     -34,478     -35,804     -45,355
    1264  Write-offs for default: Other
            adjustments, net................      -2,054
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     321,711     366,030     408,268
    ---------------------------------------------------------------------------

        The Federal National Mortgage Association, (Fannie Mae) is a
    federally-chartered, privately-owned company with a public mission to
    play a leadership role in mortgage finance, to improve the liquidity of
    the residential mortgage market and increase the availability of
    mortgage credit to low-and moderate income families and areas
    underserved by private lending institutions. In carrying out its
    mission, Fannie Mae engages primarily in two forms of business:
    investing in portfolios of residential mortgages and guaranteeing
    residential mortgage securities. As of September 30, 1997, Fannie Mae
    held a net mortgage portfolio totaling $307 billion and had net
    outstanding guaranteed mortgage-backed securities of over $566 billion.
    Fannie Mae's portfolio purchases and MBS finance about one of every five
    mortgages in the country.
        Through a federal charter, Congress has equipped Fannie Mae with
    certain attributes to help it carry out its public mission and help
    lower the cost of homeownership for Plow-, moderate-, and middle-income
    homebuyers. These include an exemption from state and local taxes
    (except real property taxes), an exemption of its debt and mortgage
    securities from Securities and Exchange Commission registration
    requirements, and potential access to U.S. Treasury funds. Fannie Mae's
    charter also prohibits the imposition of user fees. Fannie Mae pays
    federal income tax; its earnings as of third quarter suggest the company
    will pay approximately $1.2 billion for 1997. Securities guaranteed by
    Fannie Mae and debt issued by the company are solely the corporation's
    obligations and are not backed by the full faith and credit of the U.S.
    Government. The common stock of the corporation is owned by the public,
    if fully transferable, and trades on the New York, Midwest, and Pacific
    stock exchanges.
        Fannie Mae was established in 1938 to assist private markets in
    providing a steady supply of funds for housing. Fannie Mae was
    originally a subsidiary of the Reconstruction Finance Corporation and
    was permitted to purchase only loans insured by the Federal Housing
    Administration (FHA). In 1954, Fannie Mae was restructured as a mixed
    ownership (part government, part private) corporation. Congress sold the
    government's remaining interest in Fannie Mae in 1968 and completed the
    transformation to private shareholder ownership in 1970. Using the
    proceeds from the sale of subordinated debentures, Fannie Mae paid the
    Treasury $216 million for the government's preferred stock, which was
    retired, and for the Treasury's interest in the corporation's earned
    surplus. As a result, the corporation was taken off the federal budget.
        In 1992, Congress reaffirmed and clarified Fannie Mae's role in the
    housing finance system through charter act amendments included in the
    Federal Housing Enterprises Financial Safety and Soundness Act of 1992
    (``The Act''). Fannie Mae's charter purposes, as amended by the Act,
    are: ``to provide stability in the secondary market for residential
    mortgages; respond appropriately to the private capital market; provide
    ongoing assistance to the secondary market for residential mortgages
    (including activities relating to mortgages on housing for low- and
    moderate-income families involving a reasonable economic return that may
    be less than the return earned on other activities); and promote access
    to mortgage credit throughout the Nation (including central cities,
    rural areas, and underserved areas) by increasing the liquidity of
    mortgage investments and improving the distribution of investment
    capital for residential mortgage financing.''
        Fannie Mae's primary customers are low-, moderate-, and middle-
    income families. In March of 1994, the company established its ``$1
    Trillion Initiative'' to provide mortgage financing for low- and
    moderate-income families in underserved markets, and passed the halfway
    mark in 1997. The company's 28 Partnership Offices have delivered over
    $40 billion in targeted investments by tailoring Fannie Mae's products
    and services to meet the unique needs of the communities in which they
    are located. In addition, enhancements to the company's automated
    underwriting system (Desktop Underwriter 4.0) will lower underwriting
    costs, speed the approval process, and expand the availability of
    secondary market financing.
        On December 1, 1995, the U.S. Department of Housing and Urban
    Development issued a final rule that sets the levels of the affordable
    housing goals for 1996-1999 and es- tablishes the requirements for
    counting mortgage purchases to low- and moderate-income families and
    families living in underserved areas with specific census tract and
    minority concentration requirements. Under the regulations, the low- and
    moderate-income target is 42 percent; the underserved area goal is 24
    percent for the 1997-1999 period. In addition, the special affordable
    housing goal requires the corporation to target 14 percent of its
    conventional mortgage business in 1997-1999 to very low-income families
    or low-income families in low-income areas; those amounts must include
    qualifying special affordable purchases on multifamily units totaling
    not less than $1.29 billion for each year. Fannie Mae exceeded

    [[Page 1169]]

    its housing goals for 1994, 1995, and 1996 and expects to meet or exceed
    all of its goals for 1997.
        The Act also established the Office of Federal Housing Enterprise
    Oversight (OFHEO), an independent office within HUD, headed by a
    Director who reports directly to the Congress. OFHEO has statutory
    responsibility for ensuring that Fannie Mae is adequately capitalized
    and operating in a safe and sound manner. Included among the express
    statutory authorities of the Director is the authority to conduct
    examinations of the financial health of the company and to issue minimum
    and risk-based capital standards. The minimum capital requirements are
    computed from statutorily established ratios that are applied to the
    assets and off-balance sheet risks of Fannie Mae. The risk-based capital
    standard determines the amount of capital that Fannie Mae must hold to
    withstand the impact of simultaneous adverse credit and interest rate
    stresses over a 10-year period, plus an additional amount to cover
    management and operations risk. Total capital (shareholder's equity plus
    allowance for loan losses) at the end of September 1997 was $14.1
    billion. The company has continued to remain in compliance with
    applicable capital standards and has been deemed adequately capitalized
    by OFHEO since its first classification in June 1993.
        Fannie Mae has pursued its housing mission vigorously and
    productively while continuing to maintain its financial strength. It
    provides liquidity and stability to the mortgage market. It also passes
    on reduced mortgage interest rates to homebuyers--according to some
    studies between 25 and 50 basis points. Meanwhile, Fannie Mae has
    remained profitable. Through the third quarter of 1997, it earned $2.26
    billion.
        The forecast data contained in this material has been developed
    based on certain general economic assumptions prevalent in the third
    quarter of 1997 and should not be construed as an official forecast for
    Fannie Mae.
        Income and retained earnings for the years ended September 30, 1996
    and 1997 follow (in thousands of dollars):

                                              1996 actual     1997 actual
    Gross revenue...........................    24,404,500      27,065,400
    Gross expenses..........................    21,008,700      22,931,500
                                             -------------  --------------

      Income before Federal income tax......     3,395,800       4,133,900
    Federal income tax......................     1,000,300       1,225,000
                                             -------------  --------------

      Net income............................     2,395,500       2,908,900
    Retained earnings, beginning of year....     9,123,000      10,718,300
    Dividends on common stock...............      -800,200        -862,300
                                             -------------  --------------

      Retained earnings, end of year........    10,718,300      12,764,900
                                             -------------  --------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-2500-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Federal assets:

    1101    Fund balances with Treasury.....         650            124            11             20
            Investments in US securities:
    1102      Treasury securities, par......          21             26
    1104      Other.........................      53,933         64,364        71,475         77,004
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Public: direct loans (net of
              discount).....................     267,105        294,402       340,175        381,502
    1602    Federal Agencies................      10,164         12,635         4,473          4,441
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -253           -281           279            275
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................     277,016        306,756       344,927        386,218
          Other Federal assets:

    1801    Cash and other monetary assets..       6,725          7,750         7,151          7,546
    1803    Property, plant and equipment,
              net...........................         190            205
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     338,534        379,225       423,564        470,788
        LIABILITIES:
          Federal liabilities:

    2101    Accounts payable................         550            511
    2102    Accrued interest payable........       4,429          4,622         5,710          6,079
    2105    Other...........................           6              9
          Non-Federal liabilities:

    2203    Debt............................     319,153        358,003       401,216        446,884
    2204    Estimated Federal liability for
              loan guarantees, credit reform       1,936          2,330         2,573          2,508
    2206    Pension and other actuarial
              liabilities...................         178            202
    2207    Subtotal, Federal taxes payable.          15            190
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     326,267        365,867       409,499        455,471
        NET POSITION:
    3300  Cumulative results of operations..      10,718         12,765        15,023         17,422
    3600  Change In Stockholder Equity......       1,549            593          -958         -2,105
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      12,267         13,358        14,065         15,317
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     338,534        379,225       423,564        470,788
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2500-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    21.0  Travel and transportation of
            persons.........................          18          16          17
    23.3  Communications, utilities, and
            miscellaneous charges...........          12          13          14
    24.0  Printing and reproduction.........           6
    25.1  Advisory and assistance services..          92          99         109
          Other services:

    25.2    Other services--Non-Federal
              employment compensation.......         351         397         434
    25.2    Other services..................       1,680       1,459       1,339
    26.0  Supplies and materials............           4
    31.0  Equipment.........................          80          79          87
    33.0  Investments and loans.............      65,508      80,123      87,593
    43.0  Interest and dividends............      22,777      25,303      28,645
                                               ---------   ---------  ----------
    99.9    Total obligations...............      90,528     107,489     118,238
    ---------------------------------------------------------------------------

                             mortgage-backed securities

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2501-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Capital investment: Commitments to
            issue MBS.......................     279,880     160,817     156,883
                                               ---------   ---------  ----------
    10.00   Total obligations (object class
              33.0).........................     279,880     160,817     156,883
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......     279,880     160,817     156,883
    23.95 New obligations...................    -279,880    -160,817    -156,883
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Corporate borrowing authority.....     200,734      64,156      59,419
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      79,146      96,661      97,463
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................     279,880     160,817     156,883
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Uninvested...     155,523     301,700     255,245
    73.10 New obligations...................     279,880     160,817     156,883
    73.20 Total outlays (gross).............    -133,703    -207,272    -156,883
    74.40 Unpaid obligations, end of year:
            Obligated balance: Uninvested...     301,700     255,245     255,245
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      79,146      96,661      97,463
    86.98 Outlays from permanent balances...      54,557     110,611      59,420
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........     133,703     207,272     156,883
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -79,146     -96,661     -97,463
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................     200,734      64,156      59,420
    90.00 Outlays...........................      54,557     110,611      59,420
    ---------------------------------------------------------------------------

    [[Page 1170]]

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2501-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................     279,880     160,817     156,883
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...     279,880     160,817     156,883
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     636,362     690,919     801,530
    1231  Disbursements: Direct loan
            disbursements...................     133,703     207,272     156,883
    1251  Repayments: Repayments and
            prepayments.....................     -79,146     -96,661     -97,463
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     690,919     801,530     860,950
    ---------------------------------------------------------------------------

        According to accounting practices for private corporations, the
    mortgages in the pools of loans supporting the mortgage-backed
    securities are considered to be owned by the holders of these
    securities. Consequently, on the books of the Federal National Mortgage
    Association (Fannie Mae), these mortgages are not considered assets and
    the securities outstanding are not considered liabilities. However, the
    concepts of the budget of the U.S. Government consider these mortgages
    and mortgage-backed securities to be assets and liabilities,
    respectively, of Fannie Mae. For the purposes of this document,
    therefore, they are presented as assets and liabilities in the
    accompanying schedules. On the schedule of Status of direct loans for
    mortgage-backed securities, the items labeled ``New loans'' and
    ``Recoveries: Repayments and prepayments'' are budgetary terms. However,
    from the Corporation's perspective, these items are ``Amounts issued''
    and ``Amounts passed through to the holders of securities'',
    respectively.
        The forecast data contained in this material has been developed
    based on certain general economic assumptions prevalent in the third
    quarter of 1997 and should not be construed as an official forecast of
    the Corporation's position.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-2501-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............     636,883        691,438       802,051        861,476
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -521           -519          -521           -526
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................     636,362        690,919       801,530        860,950
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     636,362        690,919       801,530        860,950
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............     636,362        690,919       801,530        860,950
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     636,362        690,919       801,530        860,950
    -----------------------------------------------------------------------------------------------

                     Federal Home Loan Mortgage Corporation

                                 portfolio programs

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4420-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Interest expense and provision
              for loan loss.................      11,011      13,531      16,628
    00.02   Administration..................         483         549         624
                                               ---------   ---------  ----------
    00.91     Total operating expenses......      11,494      14,080      17,252
    01.01 Capital investment: Mortgage
            purchases for portfolio.........      36,040      39,644      43,608
                                               ---------   ---------  ----------
    10.00   Total obligations...............      47,534      53,724      60,860
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......      23,815      13,654       7,828
    22.00 New budget authority (gross)......      45,263      54,854      63,653
    22.60 Redemption of debt................      -7,890      -6,956      -6,133
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      61,188      61,552      65,348
    23.95 New obligations...................     -47,534     -53,724     -60,860
    24.40 Unobligated balance available, end
            of year: Uninvested.............      13,654       7,828       4,488
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Net change in borrowing
            authorities.....................      23,216      33,927      43,789
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      22,047      20,927      19,864
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      45,263      54,854      63,653
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Uninvested...         548       3,101       9,923
    73.10 New obligations...................      47,534      53,724      60,860
    73.20 Total outlays (gross).............     -44,981     -46,902     -52,672
    74.40 Unpaid obligations, end of year:
            Obligated balance: Uninvested...       3,101       9,923      18,111
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      23,906      30,147      40,026
    86.98 Outlays from permanent balances...      21,075      16,755      12,646
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........      44,981      46,902      52,672
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -22,047     -20,927     -19,864
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      23,216      33,927      43,789
    90.00 Outlays...........................      22,934      25,975      32,808
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4420-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      36,040      39,644      43,608
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      36,040      39,644      43,608
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     129,427     157,165     190,848
    1231  Disbursements: Direct loan
            disbursements...................      36,040      39,644      43,608
    1251  Repayments: Repayments and
            prepayments.....................      -8,302      -5,961      -2,706
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     157,165     190,848     231,750
    ---------------------------------------------------------------------------

        Federal Home Loan Mortgage Corporation (Freddie Mac), is a
    federally-charted, private shareholder-owned company with a public
    mission to provide stability and increase the liquidity of the
    residential mortgage market, and to help increase the availability of
    mortgage credit to low- and moderate-income families and in underserved
    areas. In carrying out its mission, Freddie Mac engages primarily in two
    forms of business: investing in portfolios of residential mortgages and
    guaranteeing residential mortgage securities. At the end of 1996,
    Freddie Mac held a net mortgage portfolio totaling nearly $138 billion
    and had outstanding guaranteed mortgage-backed securities of more than
    $554 billion.
        Through a federal charter, Congress has equipped Freddie Mac with
    certain advantages over wholly private firms in carrying out these
    activities. These advantages include an exemption from state and local
    taxes (except real property taxes), an exemption for their debt and
    mortgage securities from SEC filing registration requirements, and a
    potential

    [[Page 1171]]

    access to U.S. Treasury funds. Freddie Mac does pay federal income tax,
    however, and securities guaranteed by Freddie Mac and debt issued by the
    company are explicitly not backed by the full faith and credit of the
    U.S. Government. The common stock of the corporation is owned by the
    public, is fully transferable, and trades on the New York and Pacific
    stock exchanges.
        Freddie Mac was established in 1970 under the Emergency Home Finance
    Act. Congress chartered Freddie Mac to provide mortgage lenders with an
    organized national secondary market enabling them to manage their
    conventional mortgage portfolio more effectively and gain indirect
    access to a ready source of additional funds to meet new demands for
    mortgages. Freddie Mac served as a conduit facilitating the flow of
    investment dollars from the capital markets to mortgage lenders, and
    ultimately, to homebuyers, increasing the amount of mortgage credit
    available and making it more affordable.
        The Financial Institutions Reform, Recovery, and Enforcement Act of
    1989 (FIRREA) significantly changed the corporate governance of Freddie
    Mac. The company's three member Board of Directors, which had
    corresponded with the Federal Home Loan Bank Board, was replaced with an
    eighteen member Board of Directors. Thirteen board members are elected
    annually by shareholders and five are annually appointed by the
    President of the United States. In addition, FIRREA converted Freddie
    Mac's 60 million shares of non-voting, senior participating preferred
    stock into voting common stock. As a result, the corporation was taken
    off the federal budget.
        FIRREA also clarified Freddie Mac's role in the housing finance
    delivery system through amendments to its charter act. Specifically,
    FIRREA established Freddie Mac's public mission: ``to provide stability
    in the secondary market for residential mortgages; respond appropriately
    to the private capital market; and provide ongoing assistance to the
    secondary market for residential mortgages (including activities
    relating to mortgages on housing for low- and moderate-income families
    involving a reasonable economic return that may be less than the return
    earned on other activities. The Federal Housing Enterprise Financial
    Safety and Soundness Act of 1992 (``The Act'') added to Freddie Mac's
    public mission the promotion of ``access to mortgage credit throughout
    the Nation (including central cities, rural areas, and underserved
    areas) by increasing the liquidity of mortgage investments and improving
    the distribution of investment capital for residential mortgage
    financing.''
        The Act also established affordable housing goals that are designed
    to improve the flow of mortgage funds to low- and moderate-income
    families in central cities, rural areas, and other underserved areas. On
    December 1, 1995, the U.S. Department of Housing and Urban Development
    (HUD) issued a final rule that sets the levels of the goals for 1996-
    1999 and establishes the requirements for counting mortgage purchases
    for meeting these goals. The goals provide that, of the total number of
    dwelling units financed by Freddie Mac's mortgage purchases, 40 percent
    meet the low- and moderate-income goal in 1996 and 42 percent in each of
    1997, 1998, and 1999; 21 percent meet the special affordable goal in
    1996 and 24 percent in each of 1997, 1998 and 1999; and 12 percent meet
    the special affordable goals in 1996 and 14 percent in each of 1997,
    1998 and 1999, including at least $988 million in qualifying multifamily
    mortgage purchases in each year from 1996 through 1999.
        In 1996, Freddie Mac met the low- and moderate-income goal of 40
    percent with purchases of 41 percent, the underserved area goal of 21
    percent with purchases of 25 percent, the special affordable goal of 12
    percent with purchases of 14 percent, and the multifamily portion of the
    special affordable goal of $988 million with purchases of more than $1
    billion in qualifying multifamily mortgages.
        The Act also enhanced the regulatory oversight of Freddie Mac by
    establishing the Office of Federal Housing Enterprise Oversight (OFHEO),
    an independent office within HUD, headed by a Director appointed by the
    President. OFHEO is responsible for ensuring that Freddie Mac is
    adequately capitalized and operating in a safe and sound manner.
    Included among the express statutory authorities of the Director is the
    authority to conduct examinations of the financial health of the company
    and to issue minimum and risk-based capital standards. The minimum
    capital requirements are computed from statutorily established ratios
    that are applied to the assets and off-balance sheet risks of Freddie
    Mac. The risk-based capital standard determines the amount of capital
    that Freddie Mac must hold to withstand the impact of simultaneous
    adverse credit and interest rate stresses over a 10-year period, plus an
    additional amount to cover management and operations risk.
        Meanwhile, Freddie Mac has remained profitable. Freddie Mac recorded
    net income of $1.24 billion in 1996, a 14 percent increase over 1995
    earnings of $1.091 billion. While accepting and managing higher interest
    rate risk, Freddie Mac has expanded its investments in retained
    mortgages from only $34 billion in 1992 to nearly $138 billion at the
    end of 1996 in an effort to generate higher overall returns.
        The financial data contained in this material relating to future
    periods represent estimates that have been prepared specifically for
    inclusion in the President's budget. These data should not be viewed as
    an official forecast of the corporation's future position, nor should
    they be used as a basis for making financial or investment decisions
    relating to the corporation. The data have been developed on the basis
    of certain economic assumptions that are subject to periodic review and
    revision. Consequently, the estimates are subject to forecast error and
    actual results from future business operations are likely to differ from
    these data.
        According to generally accepted accounting principles utilized by
    private corporations, the mortgages in the pools of loans supporting PCs
    are considered to be owned by the holder of these securities. Therefore,
    Freddie Mac does not show these mortgages as assets. However, the budget
    philosophy of the United States Government includes these mortgages and
    mortgages pass-through securities as assets and liabilities,
    respectively, of Freddie Mac. For the purpose of this document,
    therefore, they are presented as assets and liabilities in the
    accompanying schedules. On the Status of Direct Loans schedule for
    mortgage pass-through securities, the items labeled ``Disbursements''
    and ``Repayments'' are budgetary terms. However, from Freddie Mac's
    perspective, these amounts represent ``Sales of PCs'' and ``Amounts
    passed through to PC holders,'' respectively.

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4420-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Federal assets: Fund balances with
            Treasury........................       2,689
          Non-Federal assets:

    1201    Investments in non-Federal
              securities, net...............       3,158            713           161             36
    1206    Receivables, net................       8,801          9,004         9,602         15,746
    1207    Advances and prepayments........         583            482           398            328
          Other Federal assets:

    1801    Cash and other monetary assets..      17,420          5,992        13,352         29,752
    1802    Inventories and related
              properties....................     129,427        157,165       190,848        231,750
    1803    Property, plant and equipment,
              net...........................         906            869           860            866
    1901    Other assets....................                     10,050         5,798          3,345
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     162,984        184,275       221,019        281,823
        LIABILITIES:
    2101  Federal liabilities: Accounts
            payable.........................           1             84            84             84
          Non-Federal liabilities:

    2201    Accounts payable................         764            856           959          1,074

    [[Page 1172]]

    2202    Interest payable................       1,492          1,719         1,981          2,283
    2203    Debt............................     146,954        160,051       190,848        243,338
    2206    Pension and other actuarial
              liabilities...................       7,233              7            16             37
            Other:
    2207      Accrued payroll and benefits..          38             45            53             62
    2207      Accrued annual leave (funded
                or unfunded)................           2              2             2              2
    2207      Other Liabilities.............                     14,363        19,215         26,298
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     156,484        177,127       213,158        273,178
        NET POSITION:
    3200  Invested capital..................       6,500          7,148         7,861          8,645
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       6,500          7,148         7,861          8,645
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     162,984        184,275       221,019        281,823
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4420-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    21.0  Travel and transportation of
            persons.........................          11          13          15
    23.3  Communications, utilities, and
            other rent......................          33          34          35
    24.0  Printing and reproduction.........           4           5           6
          Other services:

    25.2    Other services--Non-Federal
              employment compensation.......         289         325         366
    25.2    Other services..................         133         158         187
    26.0  Supplies and materials............          13          14          15
    33.0  Mortgage purchases for portfolio..      36,040      39,644      43,608
    43.0  Interest and provision for loan
            losses..........................      11,011      13,531      16,628
                                               ---------   ---------  ----------
    99.9    Total obligations...............      47,534      53,724      60,860
    ---------------------------------------------------------------------------

                             mortgage-backed securities

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4440-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Capital investment: Issue (sales)
            of participation certification..     103,600     106,708     109,909
                                               ---------   ---------  ----------
    10.00   Total obligations (object class
              33.0).........................     103,600     106,708     109,909
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    22.00 New budget authority (gross)......     103,600     106,708     109,909
    23.95 New obligations...................    -103,600    -106,708    -109,909
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Corporate borrowing authority (net
            PC pool change).................      -1,295      -1,291      -1,287
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............     104,895     107,999     111,196
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................     103,600     106,708     109,909
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................     103,600     106,708     109,909
    73.20 Total outlays (gross).............    -103,600    -106,708    -109,909
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................     103,600     106,708     109,909
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....    -104,895    -107,999    -111,196
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      -1,295      -1,291      -1,287
    90.00 Outlays...........................      -1,295      -1,291      -1,287
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4440-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................     103,600     106,708     109,909
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...     103,600     106,708     109,909
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     471,310     470,015     468,724
    1231  Disbursements: Direct loan
            disbursements...................     103,600     106,708     109,909
    1251  Repayments: Repayments and
            prepayments.....................    -104,895    -107,999    -111,196
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     470,015     468,724     467,437
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4440-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1901  Other Federal assets: Underlying
            Mortgages.......................     471,310        470,015       468,724        467,437
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     471,310        470,015       468,724        467,437
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............     471,310        470,015       468,724        467,437
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     471,310        470,015       468,724        467,437
    -----------------------------------------------------------------------------------------------

                               FARM CREDIT SYSTEM

        The Farm Credit System is a government sponsored enterprise that
    provides privately financed credit to agricultural and rural
    communities. The major functional entities of the system are: (1) Banks
    for Cooperatives (BC), (2) Agricultural Credit Bank (ACB), (3) Farm
    Credit Banks (FCB), and (4) direct lender associations. The history and
    specific functions of the bank entities are discussed after the
    presentation of financial schedules for each bank entity. As part of the
    Farm Credit System (FCS), these entities are regulated and examined by
    the Farm Credit Administration (FCA), an independent Federal agency. The
    administrative costs of FCA are currently financed by assessments of
    system institutions. System banks finance loans primarily from sales of
    bonds to the public and their own capital funds. The system bonds issued
    by the banks are not guaranteed by the U.S. Government either as to
    principal or interest. The bonds are backed by an insurance fund,
    administered by the Farm Credit System Insurance Corporation (FCSIC), an
    independent Federal agency that collects insurance premiums from member
    banks to pay its administrative expenses and fund insurance reserves.
    All of the banks' current operating expenses are paid from their own
    income and do not require budgetary resources from the Federal
    Government. Limited Federal assistance is provided to support interest
    payments on special FCS Financial Assistance Corporation (FAC) debt
    obligations (see discussion of FAC elsewhere in this document).

                             Banks for Cooperatives

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4120-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Administrative expenses.........           6           7           7
    00.02   Interest on borrowings..........         135         137         149
    00.03   Insurance premiums..............           3           1
    00.04   Provision for loan losses.......          49
    00.06   Income tax expense..............           1           7           7
    00.07   Other expenses..................          10          11          12
                                               ---------   ---------  ----------
    00.91     Total operating expenses......         204         163         175

    [[Page 1173]]

    01.01 Capital investment: Direct loans..      14,942      15,523      16,026
                                               ---------   ---------  ----------
    10.00   Total obligations...............      15,146      15,686      16,201
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......       2,281       2,171       2,191
    22.00 New budget authority (gross)......      15,306      15,706      16,280
    22.60 Redemption of debt................        -270
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      17,317      17,877      18,471
    23.95 New obligations...................     -15,146     -15,686     -16,201
    24.40 Unobligated balance available, end
            of year: Uninvested.............       2,171       2,191       2,270
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Net borrowing.....................                      15         106
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      15,306      15,691      16,174
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      15,306      15,706      16,280
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................      15,146      15,686      16,201
    73.20 Total outlays (gross).............     -15,146     -15,686     -16,201
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      15,146      15,686      16,201
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -15,306     -15,691     -16,174
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................                      15         106
    90.00 Outlays...........................        -160          -5          27
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4120-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      14,942      15,523      16,026
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      14,942      15,523      16,026
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........       2,222       2,026       2,065
    1231  Disbursements: Direct loan
            disbursements...................      14,941      15,523      16,026
    1251  Repayments: Repayments and
            prepayments.....................     -15,098     -15,482     -15,950
    1263  Write-offs for default: Direct
            loans...........................         -39          -2          -2
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........       2,026       2,065       2,139
    ---------------------------------------------------------------------------
        Note.--Direct loan balances exclude nonaccrual loans and sales
    contracts.

        Pursuant to the Agricultural Credit Act of 1987, stockholders in 11
    of 13 Banks for Cooperatives voted in 1988 to merge into a single
    National Bank for Cooperatives. On January 1, 1995, the Springfield Bank
    for Cooperatives also merged with other entities, as discussed below, to
    form the first Agricultural Credit Bank. The remaining Cooperative
    entity, the St. Paul Bank for Cooperatives, is independently chartered
    to provide credit and related services, nationwide, to eligible
    cooperatives primarily engaged in farm supply, grain, marketing and
    processing (including sugar and dairy.) Loans are also made to rural
    utilities, including telecommunications companies. The financial
    schedules below reflect the operations of the St. Paul Bank for
    Cooperatives. Loans are made for both seasonal and long-term needs.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4120-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Total interest income.............         200            192           196            212
    0102  Total interest expense............        -137           -135          -137           -149
                                            ------------ --------------  ------------  -------------
    0109  Net interest income...............          63             57            59             63
    0111  Other income......................          13             16            13             12
    0112  Other expenses....................         -32            -68           -25            -26
                                            ------------ --------------  ------------  -------------
    0119  Net income........................         -19            -52           -12            -14
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................         213            208           209            224
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................        -169           -202          -162           -175
                                            ------------ --------------  ------------  -------------
    0199  Net income or loss................          44              6            47             49
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4120-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Non-Federal assets:

    1201    Cash and investment securities..         356            306           308            340
    1206    Accrued interest receivable on
              loans.........................          41             36            47             50
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............       2,222          2,027         2,066          2,140
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................         -34            -64           -60            -58
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................       2,188          1,963         2,006          2,082
    1803  Other Federal assets: Property,
            plant and equipment, net........         119            132           125            132
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       2,704          2,437         2,486          2,604
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............          34             23            22             23
          Non-Federal liabilities:

            Accounts payable:
    2201      Consolidated systemwide and
                other bank bonds............       2,336          2,067         2,080          2,157
    2201      Notes payable and other
                interest-bearing liabilities          35             37            37             37
    2202    Accrued interest payable........          20             21            21             22
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       2,425          2,148         2,160          2,239
        NET POSITION:
    3300  Cumulative results of operations..         279            290           326            365
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............         279            290           326            365
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       2,704          2,438         2,486          2,604
    -----------------------------------------------------------------------------------------------
        Note.--Loans to cooperatives include nonaccrual loans and sales
    contracts.

                       Statement of Changes in Net Worth (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code    99-4120-0-3-351   1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of net worth..........         246            279           290            326
                                            ============ ==============  ============  =============

      Capital stock and participations
        issued..............................          11              6             5              7
      Capital stock and participations
        retired.............................          -8                                          -3
      Surplus retired.......................
      Net income............................          44              6            47             49
      Cash/Dividends/Patronage Distributions         -14             -1           -16            -14
      Other, net............................
                                            ------------ --------------  ------------  -------------
    Ending balance of net worth.............         279            290           326            365
    -----------------------------------------------------------------------------------------------

                  Financing Activities (in millions of dollars)

        --------------------------------------------------------------------
    Identification code 99-4120-0-3-351         1996 actual     1997 actual      1998 est.      1999 est.
        --------------------------------------------------------------------
    Beginning balance of outstanding system
      obligation............................            2,452 2,364                    2,094           2,109
                                               ==============  ==============  =============  ==============

      Consolidated systemwide and other bank
        bonds issued........................            2,662           2,622          2,600           2,637
      Consolidated systemwide and other bank
        bonds retired.......................           -2,603          -2,696         -2,683          -2,587
      Consolidated systemwide notes, net....             -147            -196             98              27
                                               --------------  --------------  -------------  --------------

    Ending balance of outstanding system
      obligations...........................            2,364 2,094                    2,109           2,186
    -------------------------------------------------------------------------------------------------------

    [[Page 1174]]

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4120-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Personnel
            compensation and benefits.......           5           6           7
    23.2  Cost of space occupied and
            equipment.......................           1           1           1
    25.2  Other services....................           3           1
    33.0  Investments and loans.............      14,942      15,523      16,026
    43.0  Interest and dividends............         135         137         149
    92.0  Undistributed expenses............          60          18          18
                                               ---------   ---------  ----------
    99.9    Total obligations...............      15,146      15,686      16,201
    ---------------------------------------------------------------------------

                            Agricultural Credit Banks

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4130-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Administrative expenses.........          39          41          45
    00.02   Interest on borrowings..........         970         998       1,097
    00.03   Insurance premiums..............          14          14          16
    00.04   Provision for loan losses.......          22          23          25
    00.06   Income tax expense..............          33          34          38
    00.07   Other expenses..................          69          71          78
                                               ---------   ---------  ----------
    00.91     Total operating expenses......       1,147       1,181       1,299
    01.01 Capital investment: direct loans..      40,668      48,000      49,000
                                               ---------   ---------  ----------
    10.00   Total obligations...............      41,815      49,181      50,299
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......       2,796       3,412       3,302
    22.00 New budget authority (gross)......      42,431      49,071      50,449
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      45,227      52,483      53,751
    23.95 New obligations...................     -41,815     -49,181     -50,299
    24.40 Unobligated balance available, end
            of year: Uninvested.............       3,412       3,302       3,452
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Authority to borrow (indefinite)..         523         494         890
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      41,908      48,577      49,559
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      42,431      49,071      50,449
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................      41,815      49,181      50,299
    73.20 Total outlays (gross).............     -41,815     -49,181     -50,299
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      41,815      49,071      50,299
    86.98 Outlays from permanent balances...                     110
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........      41,815      49,181      50,299
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -41,908     -48,577     -49,559
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................         523         494         890
    90.00 Outlays...........................         -93         604         740
    ---------------------------------------------------------------------------

        On January 1, 1995, the National Bank for Cooperatives, the
    Springfield Bank for Cooperatives, and the Farm Credit Bank of
    Springfield consolidated to form an Agricultural Credit Bank (ACB),
    known as CoBank ACB. This bank is headquartered in Denver, Colorado and
    serves eligible cooperatives nationwide, and provides funding to
    Agricultural Credit Associations (ACAs) in one of its regions. An ACB
    operates under statutory authority that combines the authorities of a
    FCB and a BC. In exercising its FCB authority, CoBank ACB's charter
    limits its lending to ACAs located in the region previously served by
    the Farm Credit Bank of Springfield. As an entity lending to
    Cooperatives, CoBank engages in the same business activities as the St.
    Paul Bank for Cooperatives and it provides international loans for the
    financing of agricultural exports.

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4130-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      40,670      48,000      49,000
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      40,670      48,000      49,000
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      14,914      14,961      15,710
    1231  Disbursements: Direct loan
            disbursements...................      40,668      48,000      49,000
    1251  Repayments: Repayments and
            prepayments.....................     -40,617     -47,246     -48,097
    1263  Write-offs for default: Direct
            loans...........................          -3          -5          -5
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      14,961      15,710      16,608
    ---------------------------------------------------------------------------

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4130-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Total interest income.............       1,317          1,268         1,306          1,436
    0102  Total interest expense............      -1,008           -970          -999         -1,099
                                            ------------ --------------  ------------  -------------
    0109  Net interest income...............         309            298           307            337
    0111  Other income......................          26             23            24             26
    0112  Other expense.....................        -198           -178          -183           -201
                                            ------------ --------------  ------------  -------------
    0119  Net income........................        -172           -155          -159           -175
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................       1,343          1,291         1,330          1,462
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................      -1,206         -1,148        -1,182         -1,300
                                            ------------ --------------  ------------  -------------
    0199  Net income or loss................         137            143           148            162
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4130-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Non-Federal assets:

    1201    Cash and investment securities..       2,915          3,452         3,250          3,350
    1206    Accrued interest receivable on
              loans.........................         167            170           178            188
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      14,914         14,962        15,710         16,608
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -208           -228          -233           -245
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      14,706         14,734        15,477         16,363
    1803  Other Federal assets: Property,
            plant and equipment, net........         139            124           118            129
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      17,927         18,480        19,023         20,030
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............         129            122           126            125
          Non-Federal liabilities:

            Accounts payable:
    2201      Consolidated systemwide and
                other bank bonds............      15,946         16,469        16,963         17,853
    2201      Notes payable and other
                interest-bearing liabilities         391            362           373            392
    2202    Accrued interest payable........         180            161           166            175
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      16,646         17,114        17,628         18,545
        NET POSITION:
    3200  Invested capital..................       1,281          1,366         1,395          1,485
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       1,281          1,366         1,395          1,485
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      17,927         18,480        19,023         20,030
    -----------------------------------------------------------------------------------------------

    [[Page 1175]]

                       Statement of Changes in Net Worth (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4130-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of net worth..........       1,213          1,281         1,365          1,395
                                            ============ ==============  ============  =============

      Capital stock and participations
        issued..............................                                        1              1
      Capital stock and participations
        retired.............................         -38            -39           -84            -39
      Net income............................         138            144           148            163
      Cash/Dividends/Patronage Distributions         -32            -34           -35            -35
      Other, net............................                         13
                                            ------------ --------------  ------------  -------------
    Ending balance of net worth.............       1,281          1,365         1,395          1,485
    -----------------------------------------------------------------------------------------------

                  Financing Activities (in millions of dollars)

        --------------------------------------------------------------------
    Identification code 99-4130-0-3-351         1996 actual     1997 actual      1998 est.      1999 est.
        --------------------------------------------------------------------
    Beginning balance of outstanding system
      obligations...........................           15,264 15,946
                                                                                      16,469          16,963
                                               ==============  ==============  =============  ==============

      Consolidated systemwide and other bank
        bonds issued........................           10,663           7,548          8,200           8,300
      Consolidated systemwide and other bank
        bonds retired.......................           -7,041          -8,420         -8,106          -7,910
      Consolidated systemwide notes, net....           -2,940           1,395            400             500
                                               --------------  --------------  -------------  --------------

    Ending balance of outstanding system
      obligations...........................           15,946 16,469
                                                                                      16,963          17,853
    -------------------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4130-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    12.1  Personnel compensation and
            benefits........................          34          35          39
    23.2  Cost of space occupied and
            equipment.......................           5           5           6
    25.2  Other services....................          14          14          16
    33.0  Investments and loans.............      40,668      48,000      49,000
    43.0  Interest and dividends............         970         999       1,099
    92.0  Undistributed expenses............         124         128         139
                                               ---------   ---------  ----------
    99.9    Total obligations...............      41,815      49,181      50,299
    ---------------------------------------------------------------------------

                                Farm Credit Banks

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4160-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Administrative expenses.........         106          97         101
    00.02   Interest on borrowings..........       2,482       2,607       2,749
    00.03   Insurance premiums..............           8          10           8
    00.04   Provision for loan losses.......           8          -3          -4
    00.05   Losses/gains on property........          -2          -1           1
    00.06   Other expenses..................         185         149         171
                                               ---------   ---------  ----------
    00.91     Total operating expenses......       2,787       2,858       3,026
    01.01 Capital investment: Direct loans..      43,441      38,985      40,492
                                               ---------   ---------  ----------
    10.00   Total obligations...............      46,228      41,843      43,518
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......       7,125       7,445       7,857
    22.00 New budget authority (gross)......      46,548      42,255      45,680
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      53,673      49,700      53,537
    23.95 New obligations...................     -46,228     -41,843     -43,518
    24.40 Unobligated balance available, end
            of year: Uninvested.............       7,445       7,857      10,019
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Authority to borrow (indefinite)..       1,646       1,353       3,252
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      44,902      40,902      42,428
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      46,548      42,255      45,680
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................      46,228      41,843      43,518
    73.20 Total outlays (gross).............     -46,228     -41,843     -43,518
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      46,228      41,843      43,518
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....     -44,902     -40,902     -42,428
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................       1,646       1,353       3,252
    90.00 Outlays...........................       1,326         941       1,090
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4160-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................      43,481      38,358      39,759
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...      43,481      38,358      39,759
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      39,216      41,025      42,421
    1231  Disbursements: Direct loan
            disbursements...................      43,441      38,985      40,492
    1251  Repayments: Repayments and
            prepayments.....................     -41,632     -37,589     -38,982
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      41,025      42,421      43,931
    ---------------------------------------------------------------------------
        Note.--Loans outstanding at end of year do not include nonaccrual
    loans and sales contracts.

        The Agricultural Credit Act of 1987 (1987 Act) required the Federal
    Land Banks (FLBs) and Federal Intermediate Credit Banks (FICBs) to merge
    into a Farm Credit Bank (FCB) in each of the 12 Farm Credit districts.
    The FCBs operate under statutory authority that combines the prior
    authorities of the FLB and the FICB. No merger occurred in the Jackson
    district in 1988 because the FLB was in receivership. Pursuant to
    section 410(e) of the 1987 Act, as amended by the Farm Credit Banks
    Safety and Soundness Act of 1992, the FICB of Jackson merged with the
    FCB of Columbia on October 1, 1993. Mergers and consolidations of FCBs
    across district lines, that began in 1992 continued through mid-1995. As
    a result of this restructuring activity, 6 FCBs headquartered in the
    following cities, remain: AgFirst FCB, Columbia, South Carolina;
    AgAmerica FCB, Spokane, Washington; AgriBank FCB, St. Paul, Minnesota;
    FCB of Wichita, Wichita, Kansas; FCB of Texas, Austin, Texas; and
    Western FCB, Sacramento, California.
        The FCBs serve as discount banks and as of October 1, 1997 provided
    funds to 31 Federal Land Credit Associations (FLCA), 64 Production
    Credit Associations (PCAs), and 60 Agricultural Credit Associations
    (ACAs). These direct lender associations, in turn, make short-term
    production loans (PCAs and ACAs) and long-term real estate loans (FLCAs
    and ACAs) to eligible farmers and ranchers. Also, as of January 1, 1996,
    51 Federal Land Bank Associations originated and serviced long-term real
    estate loans for 2 of the 6 FCBs that have no affiliated FLCAs. FCBs can
    also lend to local financing institutions, including commercial banks,
    as authorized by the Farm Credit Act of 1971, as amended.
        All the capital stock of the FICB's, 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. This retirement was
    accomplished in full on December 31, 1968. The last of the Government
    capital that had been invested in the FLB's was repaid in 1947.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4160-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Total interest income.............       3,111          3,207         3,292          3,424

    [[Page 1176]]

    0102  Total interest expense............      -2,356         -2,482        -2,607         -2,749
                                            ------------ --------------  ------------  -------------
    0109  Net interest income...............         755            725           685            675
    0111  Other income......................          47             53            21             22
    0112  Other expenses....................        -314           -304          -252           -277
                                            ------------ --------------  ------------  -------------
    0119  Net income........................        -267           -251          -231           -255
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................       3,158          3,260         3,313          3,446
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................      -2,670         -2,786        -2,859         -3,026
                                            ------------ --------------  ------------  -------------
    0199  Net income or loss................         488            474           454            420
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4160-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Non-Federal assets:

    1201    Cash and investment securities..       7,487          7,627         7,714          7,651
    1206    Accrued Interest Receivable.....         781            781           793            817
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      39,198         40,998        42,394         43,904
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -494           -484          -459           -452
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      38,704         40,514        41,935         43,452
    1803  Other Federal assets: Property,
            plant and equipment, net........         653            613           592            590
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      47,625         49,535        51,034         52,510
        LIABILITIES:
    2104  Federal liabilities: Resources
            payable to Treasury.............         272            239           239            237
          Non-Federal liabilities:

            Accounts payable:
    2201      Consolidated systemwide and
                other bank bonds............      41,941         43,588        44,942         46,242
    2201      Notes payable and other
                interest-bearing liabilities         667            821           930          1,037
    2202    Accrued interest payable........         455            483           485            501
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      43,335         45,131        46,596         48,017
        NET POSITION:
    3200  Invested capital..................       4,290          4,404         4,438          4,494
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       4,290          4,404         4,438          4,494
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      47,625         49,535        51,034         52,511
    -----------------------------------------------------------------------------------------------

                       Statement of Changes in Net Worth (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4160-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of net worth..........       4,129          4,290         4,414          4,448
                                            ============ ==============  ============  =============

      Capital stock and participations
        issued..............................          77             43            31             29
      Capital stock and participations
        retired.............................         -99            -41           -52            -36
      Net income............................         432            474           454            421
      Cash/Dividends/Patronage Distributions        -251           -365          -393           -362
      Other, net............................           2             13            -6              4
                                            ------------ --------------  ------------  -------------
    Ending balance of net worth.............       4,290          4,414         4,448          4,504
    -----------------------------------------------------------------------------------------------

                  Financing Activities (in millions of dollars)

        --------------------------------------------------------------------
    Identification code 99-4160-0-3-371         1996 actual     1997 actual      1998 est.      1999 est.
        --------------------------------------------------------------------
    Beginning balance of outstanding system
      obligations...........................           38,585 41,940
                                                                                      43,587          44,940
                                               ==============  ==============  =============  ==============

      Consolidated systemwide and other bank
        bonds issued........................           40,400          41,162         43,839          45,358
      Consolidated systemwide and other bank
        bonds retired.......................          -38,437         -39,344        -43,403         -44,858
      Consolidated systemwide notes, net....            1,392            -171            917             797
                                               --------------  --------------  -------------  --------------

    Ending balance of outstanding system
      obligations...........................           41,940 43,587
                                                                                      44,940          46,237
    -------------------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4160-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Full-time
            permanent.......................          88          79          82
    23.2  Cost of space occupied and
            equipment.......................          18          19          19
    25.2  Other services....................           8          10           8
    33.0  Investments and loans.............      43,441      38,985      40,492
    43.0  Interest and dividends............       2,482       2,607       2,749
    92.0  Undistributed expenses............         191         143         168
                                               ---------   ---------  ----------
    99.9    Total obligations...............      46,228      41,843      43,518
    ---------------------------------------------------------------------------

                    Federal Agricultural Mortgage Corporation

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4180-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    00.01 Administrative expenses...........           7          10          13
    00.02 Federal Income Taxes..............                       1           3
                                               ---------   ---------  ----------
    10.00   Total obligations...............           7          11          16
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......          12          16          20
    22.00 New budget authority (gross)......          11          15          22
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......          23          31          42
    23.95 New obligations...................          -7         -11         -16
    24.40 Unobligated balance available, end
            of year: Uninvested.............          16          20          26
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    68.00 Spending authority from offsetting
            collections (gross): Offsetting
            collections (cash)..............          11          15          22
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    73.10 New obligations...................           7          11          16
    73.20 Total outlays (gross).............          -7         -11         -16
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................           7          11          16
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....         -11         -15         -22
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................          -4          -4          -6
    ---------------------------------------------------------------------------

        Farmer Mac is authorized under the Farm Credit Act of 1971 (the
    Act), as amended by the Agricultural Credit Act of 1987, to create a
    secondary market for agricultural real estate and rural home mortgages
    that meet minimum credit standards (qualified loans). The Farmer Mac
    title of the Act was amended by the 1990 farm bill to authorize Farmer
    Mac to purchase, pool, and securitize the guaranteed portions of farmer
    program, rural business and community development loans guaranteed by
    the USDA. The Farmer Mac title was further amended in 1991 to clarify
    Farmer Mac's authority to issue debt obligations, provide for the
    establishment of minimum capital standards, and establish the Office of
    Secondary Market Oversight at the Farm Credit Administration (FCA) and
    expand the agency's rulemaking authority. Most recently, the Farm Credit
    System Reform Act of 1996 amended the Farmer Mac title to allow Farmer
    Mac to purchase loans directly from lenders and to issue and guarantee
    mortgage-backed securities without requiring that a minimum cash reserve
    or subordinated (first loss) interest be maintained by the lenders,
    poolers or investors as had been re-

    [[Page 1177]]

    quired under its original authority. The 1996 Act also increased Farmer
    Mac's capital requirements over time and expanded the regulatory
    authorities of the FCA.
        Farmer Mac operates through two programs, ``Farmer Mac I,'' which
    involves qualified loans, and ``Farmer Mac II,'' which involves
    guaranteed portions of USDA guaranteed loans. Farmer Mac operates by:
    (i) purchasing newly originated or existing qualified loans or
    guaranteed portions from lenders; and (ii) exchanging qualified loans or
    guaranteed portions for guaranteed securities. Loans purchased by Farmer
    Mac are aggregated into pools that back Farmer Mac guaranteed securities
    which are held by Farmer Mac or sold into the capital markets. Farmer
    Mac is intended to attract new capital for financing qualified loans and
    guaranteed portions, foster increased long-term, fixed-rate lending, and
    provide greater liquidity to agricultural and rural lenders. Increased
    competition among agricultural lenders, stimulated by access to the
    secondary market, should result in more favorable rates and terms for
    agricultural borrowers.
        Farmer Mac is governed by a 15 member Board of Directors. Ten Board
    members are elected by stockholders, including five by the Farm Credit
    System and five by commercial lenders. Five are appointed by the
    President, subject to Senate confirmation.

                                    Financing

        Financial support and funding for Farmer Mac's operations comes from
    several sources: sale of common and preferred stock; issuance of debt
    obligations; gain on sale of guaranteed loan-backed securities;
    guarantee fees; and income from investments. Under procedures specified
    in the Act, Farmer Mac may issue obligations to the U.S. Treasury in a
    cumulative amount not to exceed $1.5 billion to fulfill its guarantee
    obligations.
        The Act provides for the actuarial soundness of the guarantee fee to
    be reviewed annually by the Comptroller General in a report to Congress.
    The soundness of the Farmer Mac I program is maintained through the
    application of multiple procedures. First, all loans are screened
    against Farmer Mac's credit underwriting and appraisal standards.
    Second, Farmer Mac assesses annual guarantee fees set at levels
    determined, with the assistance of computer modeling tools to evaluate
    Farmer Mac's portfolio under conditions of economic stress, to be
    adequate for potential risks undertaken. Third, Farmer Mac controls
    interest rate risk through matched funding and requirement of yield
    maintenance provisions for mortgages that prepay. Fourth, Farmer Mac's
    portfolio of loans and guaranteed securities must conform to geographic
    and commodity diversification standards set by the Board. Fifth, Farmer
    Mac maintains an allowance for loan losses determined to be adequate to
    cover anticipated losses. Lastly, Farmer Mac must maintain core and risk
    based capital as provided in the Act and FCA regulations. In the Farmer
    Mac II program, the risks are minimal because only the USDA guaranteed
    portions of loans are purchased and funding is matched to effectively
    eliminate interest rate risk.
        Available funds of Farmer Mac are invested in U.S. agency securities
    or other high-grade commercial investments. No stock dividends are
    allowed under the Act until the Board determines that an adequate loss
    reserve has been funded to back Farmer Mac guarantees.

                                   Guarantees

        Farmer Mac provides a guarantee of timely payment of principal and
    interest on securities backed by qualified loans or pools of qualified
    loans. These securities are not guaranteed by the United States, and are
    not ``government securities''. The 1996 Act removed requirements that
    loan originators or other third parties maintain cash reserves or
    subordinated securities in connection with the issuance of Farmer Mac's
    guaranteed securities.
        Farmer Mac is subject to reporting requirements under securities
    laws and its guaranteed mortgage-backed securities are subject to
    registration with the Securities and Exchange Commission under the 1933
    and 1934 Securities Acts.

                                   Regulation

        Farmer Mac is federally regulated by the FCA's Office of Secondary
    Market Oversight (OSMO). OSMO is responsible for examination of and
    rulemaking for Farmer Mac, including the determination of the stress
    test to evaluate the adequacy of Farmer Mac's capital and the
    establishment of risk-based capital requirements after February 1999.
    The 1996 amendments to the Farmer Mac title expanded FCA's regulatory
    authority to include provisions for establishing a conservatorship or
    receivership, if necessary, and provided for increased levels of core
    capital phased in over three years. As of September 30, 1997, Farmer
    Mac's total capital exceeds regulatory and statutory requirements.
    Lastly, during the capital phase-in period the U.S. Treasury and FCA
    jointly monitor Farmer Mac's financial condition and report to Congress
    biannually, as requested by Congress in connection with the enactment of
    the 1996 Act.

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4180-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on commitments:
    2111  Limitation on guaranteed loans
            made by private lenders.........
    2131  Guaranteed loan commitments exempt
            from limitation.................         302         528         924
                                               ---------   ---------  ----------
    2150    Total guaranteed loan
              commitments...................         302         528         924
    ----------------------------------------------------------------------------

        Cumulative balance of guaranteed loans
                    outstanding:
    2210  Outstanding, start of year........         598         814       1,208
    2231  Disbursements of new guaranteed
            loans...........................         302         528         924
    2251  Repayments and prepayments........         -86        -134        -213
                                               ---------   ---------  ----------
    2290    Outstanding, end of year........         814       1,208       1,919
    ----------------------------------------------------------------------------

        Memorandum:
    2299  Guaranteed amount of guaranteed
            loans outstanding, end of year..         814       1,208       1,919
    ---------------------------------------------------------------------------

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4180-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        Revenue:
    0101  Net Interest Income...............           3              6             7              7
    0101  Guarantee Fee Income..............           1              2             4              7
    0101  Gain on Security Issuance.........           1              2             4              7
    0101  Other Income......................           1                                           1
    0102  Expense...........................          -5             -7           -11            -16
                                            ------------ --------------  ------------  -------------
    0109  Net income or loss (-)............           1              3             4              6
                                            ------------ --------------  ------------  -------------
    0199  Net income or loss................           1              3             4              6
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4180-0-3-351    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Non-Federal assets:

    1201    Investment in securities........         502            647           717            804
    1206    Receivables, net................           3              3             3              3
    1207    Advances and prepayments........           1              2             2              2
          Net value of assets related to
              direct loans receivable:

    1401    Direct loans receivable, gross..          13            461           529            593
    1402    Interest receivable.............          15             15            15             15
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....          28            476           544            608
    1801  Other Federal assets: Cash and
            other monetary assets...........          69            246           246            246
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................         603          1,374         1,512          1,663

    [[Page 1178]]

        LIABILITIES:
          Non-Federal liabilities:

    2201    Accounts payable................           2              2             2              2
    2202    Interest payable................           7              8             8              8
    2203    Debt............................         546          1,313         1,426          1,571
    2204    Liabilities for loan guarantees.           1              1             1              1
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............         556          1,324         1,437          1,582
        NET POSITION:
    3200  Invested capital..................          47             50            75             81
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............          47             50            75             81
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position         603          1,374         1,512          1,663
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4180-0-3-351      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Personnel
            compensation and benefits.......           3           5           6
    25.2  Other services....................           4           5           7
    92.0  Undistributed.....................                       1           3
                                               ---------   ---------  ----------
    99.9    Total obligations...............           7          11          16
    ---------------------------------------------------------------------------

                          FEDERAL HOME LOAN BANK SYSTEM

                             Federal Home Loan Banks

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4200-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
          Operating expenses:

    00.01   Administrative expenses
              including FHFB assessments....         237         237         237
    00.02   Affordable Housing program......         131         131         131
    00.03   Interest on consolidated
              obligations and loss on debt
              retirement....................      14,585      14,486      14,486
    00.04   Interest on members' deposits
              and other borrowings..........         846         846         846
    00.05   Payment to REFCORP..............         300         300         300
    00.06   Cash dividends on capital stock.         638         638         638
                                               ---------   ---------  ----------
    00.91     Total operating expenses......      16,737      16,638      16,638
          Capital investment:

    01.01   Investment in bank premises.....          11          11          11
    01.04   Net increase in advances........      28,526      10,910      11,564
    01.05   Net increase in investments.....      13,856       4,760       4,219
    01.06   Repurchase of capital stock.....       2,584       2,600       2,600
                                               ---------   ---------  ----------
    01.91     Total capital investment......      44,978      18,281      18,394
                                               ---------   ---------  ----------
    10.00   Total obligations...............      61,714      34,918      35,031
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Authority to
            borrow..........................                     381         473
    22.00 New budget authority (gross)......      62,095      35,011      35,127
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......      62,095      35,392      35,600
    23.95 New obligations...................     -61,714     -34,918     -35,031
    24.40 Unobligated balance available, end
            of year: Authority to borrow....         381         473         568
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    67.15 Authority to borrow (indefinite)..      40,650      15,165      15,247
    68.00 Spending authority from offsetting
            collections: Offsetting
            collections (cash)..............      21,445      19,846      19,880
                                               ---------   ---------  ----------
    70.00   Total new budget authority
              (gross).......................      62,095      35,011      35,127
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
          Unpaid obligations, start of year:

            Obligated balance:
              Uninvested:
    72.40       Uninvested..................         358         457         457
    72.40       Authority to borrow.........       3,648       4,107       4,205
    72.41     U.S. Securities: Par value....       1,695       1,739       1,791
                                               ---------   ---------  ----------
    72.99     Total unpaid obligations,
                start of year...............       5,701       6,303       6,453
    73.10 New obligations...................      61,714      34,918      35,031
    73.20 Total outlays (gross).............     -61,112     -34,768     -34,878
          Unpaid obligations, end of year:

            Obligated balance:
              Uninvested:
    74.40       Uninvested..................         457         457         457
    74.40       Authority to borrow.........       4,107       4,205       4,305
    74.41     U.S. Securities: Par value....       1,739       1,791       1,844
                                               ---------   ---------  ----------
    74.99     Total unpaid obligations, end
                of year.....................       6,303       6,453       6,606
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................      61,112      34,768      34,878
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Collections from non-
              Federal sources...............     -21,445     -19,846     -19,880
    ----------------------------------------------------------------------------

        Net budget authority and outlays:
    89.00 Budget authority..................      40,650      15,165      15,247
    90.00 Outlays...........................      39,667      14,922      14,998
    ---------------------------------------------------------------------------

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4200-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
        Position with respect to appropriations act
                    limitation on obligations:
    1111  Limitation on direct loans........
    1131  Direct loan obligations exempt
            from limitation.................     980,417   1,039,240   1,101,600
                                               ---------   ---------  ----------
    1150    Total direct loan obligations...     980,417   1,039,240   1,101,600
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     153,302     181,828     192,738
    1231  Disbursements: Direct loan
            disbursements...................     980,417   1,039,240   1,101,600
    1251  Repayments: Repayments and
            prepayments.....................    -951,891  -1,028,330  -1,090,036
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     181,828     192,738     204,302
    ---------------------------------------------------------------------------

        The 12 Federal Home Loan Banks were chartered by the Federal Home
    Loan Bank Board under the authority of the Federal Home Loan Bank Act of
    1932 (the Act). The FHLBanks are under the supervision of the Federal
    Housing Finance Board. The common mission of the FHLBanks is to
    facilitate the extension of credit through their members in order to
    provide access to housing for all Americans and to improve the quality
    of their communities. To accomplish this mission, the FHLBanks make
    loans, called advances, and provide other credit products and services
    to their nearly 6,418 member commercial banks, savings associations,
    insurance companies, and credit unions. Advances and letters of credit
    must be fully secured by eligible collateral and long-term advances may
    be made only for the purpose of providing funds for residential housing
    finance. Additionally, specialized advance programs provide funds for
    community reinvestment and affordable housing programs. All regulated
    financial depositories and insurance companies engaged in residential
    housing finance are eligible for membership. Each FHLBank operates in a
    geographic district designated by the Board and together the FHLBanks
    cover all of the United States as well as the District of Columbia,
    Puerto Rico, the Virgin Islands, Guam, American Samoa, and the Northern
    Mariana Islands.
        Advances outstanding on September 30, 1997 totaled approximately
    $181.8 billion, a net increase of approximately $28.5 billion from the
    September 30, 1996 level of $153.3 billion.
        The principal source of funds for the lending operation is the sale
    of consolidated obligations to the public. On September 30, 1997, $284.5
    billion of these obligations were outstanding. The consolidated
    obligations are not guaranteed by the U.S. Government as to principal or
    interest. Other sources

    [[Page 1179]]

    of lendable funds include members' deposits and capital. Deposits
    totaled $15.3 billion and total capital amounted to $18.4 billion as of
    September 30, 1997. Funds not immediately needed for advances to members
    are invested.
        The capital stock of the Federal Home Loan Banks is owned entirely
    by the members. Initially the U.S. Government purchased stock of the
    banks in the amount of $125 million. The banks had repurchased the
    Government's investment in full by mid-1951.
        The operating expenses of the FHLBanks are paid from their own
    income and are not included in the budget of the United States. Included
    in these expenses are the assessments by the Finance Board to cover its
    administrative and other costs. The Finance Board's budget and
    expenditures, however, are included in the budget of the United States.
         The Act, as amended in 1989, requires each FHLBank to operate an
    Affordable Housing Program (AHP). Each FHLBank provides subsidies in the
    form of direct grants or below-market rate advances for members that use
    the funds for qualifying affordable housing projects. The FHLBank system
    sets aside for its AHPs a minimum of $100 million annually. The Act also
    requires that the FHLBanks contribute $300 million annually to assist in
    the payment of interest on bonds issued by the Resolution Funding
    Corportion.
        The forecast data for 1998 and 1999 contained in this material
    represents estimates and should not be construed as an official forecast
    of the FHLBanks System's future position.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4200-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................      15,712         17,286        17,184         17,184
    0102  Expense (excludes payments to
            REFCORP)........................     -14,364        -15,799       -15,699        -15,699
                                            ------------ --------------  ------------  -------------
    0109  Net income........................       1,348          1,487         1,485          1,485
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4200-0-3-371    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1102    Federal assets: Treasury
              securities, net...............       1,695          1,739         1,791          1,844
          Non-Federal assets:

    1201    Investments in non-Federal
              securities, net...............     121,996        135,852       140,612        144,831
    1206    Accounts receivable.............       3,883          4,604         4,742          4,884
    1401  Net value of assets related to
            direct loans receivable: Direct
            loans receivable, gross.........     153,302        181,828       192,738        204,302
          Other Federal assets:

    1801    Cash and other monetary assets..         358            457           457            457
    1803    Property, plant and equipment,
              net...........................         156            149           149            149
    1901    Other assets....................         339            304           304            304
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     281,728        324,933       340,793        356,771
        LIABILITIES:
    2101  Federal liabilities: REFCORP and
            AHP.............................         388            439           440            440
          Non-Federal liabilities:

    2201    Accounts payable................         234            205           205            205
    2202    Interest payable................       4,259          4,970         5,119          5,272
    2203    Debt............................     243,533        284,545       299,710        314,957
            Other:
    2207      Deposit funds and other
                borrowings..................      16,038         15,676        15,676         15,676
    2207      Other.........................         820            689           689            689
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     265,272        306,524       321,839        337,239
        NET POSITION:
    3200  Invested capital..................      16,456         18,408        18,954         19,532
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      16,456         18,408        18,954         19,532
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     281,728        324,933       340,793        356,771
    -----------------------------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4200-0-3-371      1997 actual   1998 est.   1999 est.
    ----------------------------------------------------------------------------
    11.1  Personnel compensation: Full-time
            permanent.......................         100         100         100
    12.1  Civilian personnel benefits.......          22          22          22
    21.0  Travel and transportation of
            persons.........................           6           6           6
    23.3  Communications, utilities, and
            other rent......................          16          16          16
    24.0  Printing and reproduction.........           7           7           7
    25.2  Other services....................          86          86          86
    31.0  Equipment.........................           7           7           7
    32.0  Land and structures...............           4           4           4
          Investments and loans:

    33.0    Net increase in advances........      28,526      10,910      11,564
    33.0    Net increase in investments.....      13,856       4,760       4,219
    41.0  Subsidies (Affordable Housing
            Program)........................         131         131         131
          Interest and dividends:

    43.0    Interest and cash dividends.....      16,069      15,969      15,969
    43.0    REFCORP interest................         300         300         300
    92.0  Repurchase of capital stock
            (gross).........................       2,584       2,600       2,600
                                               ---------   ---------  ----------
    99.9    Total obligations...............      61,714      34,918      35,031
    ---------------------------------------------------------------------------

                              Financing Corporation

        The Financing Corporation (FICO) is a mixed-ownership government
    corporation, chartered by the Federal Home Loan Bank Board pursuant to
    the Federal Savings and Loan Insurance Corporation Recapitalization Act
    of 1987, as amended (the ``Act''). FICO's sole purpose was to function
    as a financing vehicle for the FSLIC Resolution Fund, formerly the
    Federal Savings and Loan Insurance Corporation (FSLIC). FICO operates
    under the supervision and control of the Federal Housing Finance Board
    (the ``Finance Board''). Pursuant to the Act, FICO was authorized to
    issue debentures, bonds and other obligations subject to limitations
    contained in the Act, 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. The Resolution Trust
    Corporation Refinancing, Restructuring, and Improvement Act of 1991
    terminated the FICO's borrowing authority.
        The Act provided formulas pursuant to which the Federal Home Loan
    Banks made capital contributions to FICO at the direction of the Finance
    Board for the purchase of FICO capital stock. FICO used the proceeds
    received from the sales of such capital stock to purchase non-interest
    bearing securities for deposit in a segregated account as required by
    the Act. The non-interest bearing securities held in the segregated
    account will be the primary source of repayment of the principal of the
    FICO obligations. Securities in the segregated account are kept separate
    from other FICO accounts and funds but are not specifically pledged as
    collateral for the payment of obligations. The primary source of payment
    of interest on the obligations is the receipt of assessments imposed on
    and collected from institutions' accounts which are insured by the Bank
    Insurance Fund (the ``BIF'') and the Savings Association Insurance Fund
    (the ``SAIF'').

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4033-0-3-373    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................         906            915           926            938
    0102  Expense...........................        -795           -795          -795           -795
                                            ------------ --------------  ------------  -------------
    0109  Net income........................         111            120           131            143
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4033-0-3-373    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1102    Federal assets: Segregated
              accounts investment, net......       1,355          1,475         1,606          1,749
          Other Federal assets:

    1801    Cash, cash equivalents, and
              interest receivable...........         281            266           266            266

    [[Page 1180]]

    1901    Other assets....................          12             12            11             11
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       1,648          1,753         1,883          2,026
        LIABILITIES:
          Non-Federal liabilities:

    2202    Interest payable................         236            236           236            236
    2203    Debt............................       8,142          8,144         8,145          8,146
    2207    Other...........................          85             69            67             65
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       8,463          8,449         8,448          8,447
        NET POSITION:
    3100  FICO capital stock purchased by
            FHLBanks........................         680            680           680            680
          Invested capital:

    3200    FSLIC capital certificates......      -7,568         -7,568        -7,568         -7,568
    3200    FSLIC nonvoting capital stock...        -603           -603          -603           -603
    3300  Cumulative results of operations..         675            796           927          1,069
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      -6,816         -6,695        -6,564         -6,422
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       1,647          1,754         1,884          2,025
    -----------------------------------------------------------------------------------------------

                         Resolution Funding Corporation

        The Resolution Funding Corporation (the ``REFCORP'') is a mixed-
    ownership government corporation established by Title V of the Financial
    Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). The
    sole purpose of REFCORP was to provide financing for the Resolution
    Trust Corporation (the ``RTC''). Pursuant to FIRREA, REFCORP was
    authorized to issue debentures, bonds, and other obligations, subject to
    limitations contained in the Act and regulations established by the
    Thrift Depositor Protection Oversight Board. The proceeds of the debt
    (less any discount, plus any premium, net of issuance cost) were used
    solely to purchase nonredeemable capital certificates of the RTC or to
    refund any previously issued obligations.

        REFCORP is subject to the general oversight and direction of the
    Thrift Depositor Protection Oversight Board. The day-to-day operations
    of REFCORP are under the management of a three-member Directorate
    comprised of the Director of the Office of Finance of the Federal Home
    Loan Banks and two members selected by the Oversight Board from among
    the presidents of the twelve Federal Home Loan Banks (``the FHLBanks'').
    Members of the Directorate serve without compensation, and REFCORP is
    not permitted to have any paid employees.

        FIRREA and the regulations adopted by the Thrift Depositor
    Protection Oversight Board provide formulas pursuant to which the
    Federal Home Loan Banks made capital contributions to REFCORP's
    Principal Fund and continue to make interest payments on outstanding
    REFCORP obligations. FIRREA also provides that the U.S. Treasury cover
    any interest shortfall. Funds designated for the Principal Funds were
    used to purchase zero-coupon bonds. The zero-coupon bonds will be held
    in the Principal Fund and are the primary source of repayment of the
    principal of the obligations at maturity.

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4029-0-3-373    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................       2,925          2,940         2,967          2,995
    0102  Expense...........................      -2,633         -2,626        -2,626         -2,626
                                            ------------ --------------  ------------  -------------
    0109  Net income........................         292            314           341            369
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4029-0-3-373    1996 actual    1997 actual     1998 est.      1999 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1102    Federal assets: Principal fund
              account investment, net.......       3,856          4,168         4,504          4,868
    1206  Non-Federal assets: Assessments
            receivable for interest expense.         888            888           881            881
    1901  Other Federal assets: Other assets           1
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       4,745          5,056         5,385          5,749
        LIABILITIES:
          Non-Federal liabilities:

    2202    Accrued interest payable on
              long-term obligations.........         888            888           881            881
    2203    Debt............................      30,074         30,072        30,069         30,067
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      30,962         30,960        30,950         30,948
        NET POSITION:
    3100  Nonvoting capital stock issued to
            FHLBanks........................       2,513          2,513         2,513          2,513
          Invested capital:

    3200    RTC nonredeemable capital
              certificates..................     -31,286        -31,286       -31,286        -31,286
    3200    Contributed capital--principal
              fund assessments..............       1,057          1,057         1,057          1,057
    3300  Cumulative results of operations..       1,499          1,813         2,152          2,519
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............     -26,217        -25,903       -25,564        -25,197
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       4,745          5,057         5,386          5,751
    -----------------------------------------------------------------------------------------------

                BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

                   Program and Financing (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4450-0-3-803      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

        Obligations by program activity:
    09.01 Monetary and economic policy......          73          74          81
    09.02 Services to financial institutions
            and the public..................           4           4           4
    09.03 Supervision and regulation of
            financial institutions..........          66          67          71
    09.04 System policy direction and
            oversight.......................          32          33          35
                                               ---------   ---------  ----------
    09.09   Subtotal: Board operating
              expenses......................         175         178         191
    09.10 Office of Inspector General
            operating expenses..............           3           3           3
                                               ---------   ---------  ----------
    10.00   Total obligations...............         178         181         194
    ----------------------------------------------------------------------------

        Budgetary resources available for obligation:
    21.40 Unobligated balance available,
            start of year: Uninvested.......          -2
    22.00 New budget authority (gross)......         180         181         194
                                               ---------   ---------  ----------
    23.90   Total budgetary resources
              available for obligation......         178         181         194
    23.95 New obligations...................        -178        -181        -194
    ----------------------------------------------------------------------------

        New budget authority (gross), detail:
    68.00 Spending authority from offsetting
            collections (gross): Offsetting
            collections (cash)..............         180         181         194
    ----------------------------------------------------------------------------

        Change in unpaid obligations:
    72.40 Unpaid obligations, start of year:
            Obligated balance: Uninvested...          18          26          26
    73.10 New obligations...................         178         181         194
    73.20 Total outlays (gross).............        -170        -181        -194
    74.40 Unpaid obligations, end of year:
            Obligated balance: Uninvested...          26          26          26
    ----------------------------------------------------------------------------

        Outlays (gross), detail:
    86.97 Outlays from new permanent
            authority.......................         155         165         179
    86.98 Outlays from permanent balances...          15          16          15
                                               ---------   ---------  ----------
    87.00   Total outlays (gross)...........         170         181         194
    ----------------------------------------------------------------------------

        Offsets:
          Against gross budget authority and outlays:

    88.40   Offsetting collections (cash)
              from: Non-Federal sources.....        -180        -181        -194
    ----------------------------------------------------------------------------

    [[Page 1181]]

        Net budget authority and outlays:
    89.00 Budget authority..................
    90.00 Outlays...........................         -10
    ---------------------------------------------------------------------------
        The figures presented may differ from other Board financial material
    because they are prepared in accordance with OMB guidelines which vary
    from the Board's budget and accounting procedures.

        The Federal Reserve System operates under the provisions of the
    Federal Reserve Act of 1913, as amended, and other acts of Congress.
        Program.--To carry out its responsibilities under the Act, the Board
    determines general monetary, credit, and operating policies for the
    System as a whole and formulates the rules and regulations necessary to
    carry out the purposes of the Federal Reserve Act. The Board's principal
    duties consist of exerting an influence over credit conditions and
    supervising the Federal Reserve banks and member banks.
        Financing.--Under the provisions of section 10 of the Federal
    Reserve Act, the Board of Governors levies upon the Federal Reserve
    banks, in proportion to their capital and surplus, an assessment
    sufficient to pay its estimated expenses. The Board, under the Act,
    determines and prescribes the manner in which its obligations are
    incurred and its expenses paid. Funds derived from assessments are
    deposited in the Federal Reserve Bank of Richmond, and the Act provides
    that such funds ``shall not be construed to be Government funds or
    appropriated moneys.'' No Government appropriation is required to
    support operations of the Board.
        The information presented pertains to Board operations only.
    Expenditures made on behalf of the Federal Reserve banks for production,
    issuance, retirement, and shipment of Federal Reserve notes are not
    included, since they are reimbursed in full by the Federal Reserve
    banks.

                       Balance Sheet (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4450-0-3-803      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------
        ASSETS:
    1206  Non-Federal assets: Receivables,
            net.............................           5           7           7
          Other Federal assets:

    1801    Cash in bank....................          16          15          15
    1803    Property, plant and equipment,
              net...........................         121         123         123
                                               ---------   ---------  ----------
    1999    Total assets....................         142         145         145
        LIABILITIES:
          Non-Federal liabilities:

    2201    Accounts payable and accrued
              liabilities...................          26          26          26
    2206    Pension and other actuarial
              liabilities...................          20          21          21
                                               ---------   ---------  ----------
    2999    Total liabilities...............          46          47          47
        NET POSITION:
    3200  Invested capital..................         121         123         123
    3300  Cumulative results of operations..         -25         -25         -25
                                               ---------   ---------  ----------
    3999    Total net position..............          96          98          98
                                               ---------   ---------  ----------
    4999  Total liabilities and net position         142         145         145
    ---------------------------------------------------------------------------

                   Object Classification (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4450-0-3-803      1996 actual   1997 est.   1998 est.
    ----------------------------------------------------------------------------

          Reimbursable obligations:

            Personnel compensation:
    11.1      Full-time permanent...........         100         102         106
    11.3      Other than full-time permanent           2           2           2
    11.5      Other personnel compensation..           2           2           2
                                               ---------   ---------  ----------
    11.9        Total personnel compensation         104         106         110
    12.1    Civilian personnel benefits.....          17          18          16
    21.0    Travel and transportation of
              persons.......................           5           5           5
    23.3    Communications, utilities, and
              miscellaneous charges.........          10          10          10
    24.0    Printing and reproduction.......           3           3           3
    25.1    Advisory and assistance services           3           2           2
    25.2    Other services..................          16          16          22
    26.0    Supplies and materials..........           6           6           8
    31.0    Equipment.......................          11          12          15
                                               ---------   ---------  ----------
    99.0      Subtotal, reimbursable
                obligations.................         175         178         191
    25.2  Allocation Account: Other services           3           3           3
                                               ---------   ---------  ----------
    99.9    Total obligations...............         178         181         194
    ---------------------------------------------------------------------------