[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
---------------------------------------------------------------------------