Appendix - Estimates for Government-Sponsored Enterprises

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

[[Page 1227]]

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 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

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 8,310 8,295 8,766
--------- --------- ----------
1150 Total direct loan obligations... 8,310 8,295 8,766
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 34,259 29,468 26,048
1231 Disbursements: Direct loan
disbursements................... 8,310 8,295 8,766
Repayments:

1251 Repayments and prepayments...... -4,951 -2,873 -2,695
1252 Proceeds from loan asset sales
to the public or discounted... -8,348 -9,000 -12,000
1264 Write-offs for default: Other
adjustments, net................ 198 158 142
--------- --------- ----------
1290 Outstanding, end of year........ 29,468 26,048 20,261
---------------------------------------------------------------------------

The Student Loan Marketing Association (Sallie Mae) was created as a
shareholder-owned government sponsored enterprise (GSE) 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 was privatized in 1997 pursuant to the authority
granted by the Student Loan Marketing Association Reorganization Act of
1996. The GSE is a wholly owned subsidiary of SLM Holding Corporation
and must wind down and be liquidated by September 30, 2008. Under
legislation passed in 1998, if SLM Holding Corporation affiliates with a
depository institution, the GSE must wind down within two years (unless
such period is extended by the Department of the Treasury).
The GSE 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, the GSE is authorized, at the request of Federal
officials, to make insured loans directly to students. The GSE is
authorized to advance funds to State agencies that will provide loans to
students. The GSE 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.
The GSE 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.
Generally, under the privatization legislation, the GSE cannot
engage in any new business activities or acquire any additional program
assets other than purchasing student loans and serving, at the request
of the Secretary of Education, as a lender-of-last-resort. The GSE can
continue to make warehousing advances under contractual commitments
existing on August 8, 1997.

[[Page 1228]]

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]

1998 actual 1999 est. 2000 est.
Guaranteed student loans:
Stafford (formerly ``regular''):
Purchased....................... 6,182 6,921 7,314
Warehoused...................... 896
PLUS/SLS: Purchased............... 573 642 678
------------------------------------
Subtotal, Guaranteed student
loans....................... 7,651 7,563 7,992
Health professions loans: Purchased.
Other............................... 659 732 774
------------------------------------
Total......................... 8,310 8,296 8,766
====================================

Financing.--The GSE is financed by borrowing in the private debt
markets and securitizing its assets. Its debt obligations today have
certain characteristics, provided by charter, which give them ``agency''
status, but they are not federally insured or guaranteed. 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.

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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 3,808 3,116
0102 Expense........................... -3,300 -2,595
------------ -------------- ------------ -------------
0109 Net income........................ 508 521
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

Investments in US securities:
1102 Treasury securities, par...... 1,382 1,404 1,432 1,461
1104 Agency securities, par........
1106 Receivables, net.............. 773 669 468 328
Non-Federal assets:

1201 Investments in non-Federal
securities, net............... 5,318 2,728 999 1,089
1206 Receivables, net................ 436 706 918 1,193
1207 Advances and prepayments........ 19 15 16 17
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 34,384 29,586 26,152 20,342
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -125 -118 -104 -81
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 34,259 29,468 26,048 20,261
Other Federal assets:

1801 Cash and other monetary assets.. 91 50 52 55
1803 Property, plant and equipment,
net........................... 211 182 191 201
1901 Other assets.................... 572 358 376 395
------------ -------------- ------------ -------------
1999 Total assets.................... 43,061 35,580 30,500 25,000
LIABILITIES:
Non-Federal liabilities:

2202 Interest payable................ 468 300 270 243
2203 Debt............................ 40,230 33,517 28,527 23,143
2207 Other........................... 1,110 883 928 974
------------ -------------- ------------ -------------
2999 Total liabilities............... 41,808 34,700 29,725 24,360
NET POSITION:
3200 Invested capital.................. 1,253 880 775 640
------------ -------------- ------------ -------------
3999 Total net position.............. 1,253 880 775 640
------------ -------------- ------------ -------------
4999 Total liabilities and net position 43,061 35,580 30,500 25,000
-----------------------------------------------------------------------------------------------

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Federal National Mortgage Association Portfolio Programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1131 Direct loan obligations exempt
from limitation................. 144,627 153,329 106,720
--------- --------- ----------
1150 Total direct loan obligations... 144,627 153,329 106,720
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 321,711 393,210 494,022
Disbursements:

1231 Direct loan disbursements....... 136,759 159,075 106,308
1232 Purchase of loans assets from
the public.................... 5,420 376 336
1251 Repayments: Repayments and
prepayments..................... -68,683 -58,639 -51,008
1264 Write-offs for default: Other
adjustments, net................ -1,997
--------- --------- ----------
1290 Outstanding, end of year........ 393,210 494,022 549,658
---------------------------------------------------------------------------

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, 1998, Fannie Mae
held a net mortgage portfolio totaling $376 billion and had net
outstanding guaranteed mortgage-backed securities of over $626 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 $1.4 billion for 1998. 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.

[[Page 1229]]

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 Commitment'' to provide mortgage financing for low- and
moderate-income families in underserved markets, and passed the two-
thirds mark in 1998. The company's 33 Partnership Offices have delivered
$75 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, the company's automated underwriting system
(Desktop Underwriter) has processed over 2 million loans, greatly
speeding the approval process.
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 establishes 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 its
housing goals in each year since 1994 and expects to meet or exceed all
of its goals for 1998.
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 1998 was $15.6
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 1998, it earned $2.53
billion.
The forecast data contained in this material has been developed
based on certain general economic assumptions prevalent in the third
quarter of 1998 and should not be construed as an official forecast for
Fannie Mae.
Income and retained earnings for the years ended September 30, 1997
and 1998 follow (in thousands of dollars):

1997 actual 1998 actual
Gross revenue........................... 27,065,400 30,510,100
Gross expenses.......................... 22,931,500 25,885,200
------------- --------------

Income before Federal income tax...... 4,133,900 4,624,900
Federal income tax...................... 1,225,000 1,365,800
------------- --------------

Net income............................ 2,908,900 3,259,100
Retained earnings, beginning of year.... 10,721,700 12,766,100
Dividends on common stock............... 864,500 960,600
------------- --------------

Retained earnings, end of year........ 12,766,100 15,064,600
------------- --------------

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Federal assets:

1101 Fund balances with Treasury..... 124 19
Investments in US securities:
1102 Treasury securities, par...... 26 123
1104 Other......................... 64,364 68,714 68,005 75,353
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Public: direct loans (net of
discount)..................... 294,402 362,478 439,757 491,632
1602 Federal Agencies................ 12,635 13,854 3,751 3,522
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -281 -254 -249 -240
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 306,756 376,078 443,259 494,914
Other Federal assets:

1801 Cash and other monetary assets.. 7,750 9,974 8,988 8,197
1803 Property, plant and equipment,
net........................... 205 191
------------ -------------- ------------ -------------
1999 Total assets.................... 379,225 455,099 520,252 578,464
LIABILITIES:
Federal liabilities:

2101 Accounts payable................ 511 400
2102 Accrued interest payable........ 4,622 5,544 6,800 7,452
2105 Other........................... 9 8
Non-Federal liabilities:

2203 Debt............................ 358,003 430,582 494,356 550,366
2204 Estimated Federal liability for
loan guarantees, credit reform 2,330 3,135 2,466 2,224
2206 Pension and other actuarial
liabilities................... 202 225
2207 Subtotal, Federal taxes payable. 190 353
------------ -------------- ------------ -------------
2999 Total liabilities............... 365,867 440,247 503,622 560,042
NET POSITION:
3300 Cumulative results of operations.. 12,765 15,065 17,611 20,326
3600 Change In Stockholder Equity...... 593 -213 -981 -1,905
------------ -------------- ------------ -------------
3999 Total net position.............. 13,358 14,852 16,630 18,421
------------ -------------- ------------ -------------
4999 Total liabilities and net position 379,225 455,099 520,252 578,463
-----------------------------------------------------------------------------------------------

mortgage-backed securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1131 Direct loan obligations exempt
from limitation................. 89,534 346,794 204,271
--------- --------- ----------
1150 Total direct loan obligations... 89,534 346,794 204,271
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 690,919 798,460 923,520

[[Page 1230]]

1231 Disbursements: Direct loan
disbursements................... 275,533 346,794 204,271
1251 Repayments: Repayments and
prepayments..................... -167,992 -221,734 -129,853
--------- --------- ----------
1290 Outstanding, end of year........ 798,460 923,520 997,938
---------------------------------------------------------------------------

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 1998 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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 691,438 799,006 924,049 998,433
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -519 -546 -529 -495
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 690,919 798,460 923,520 997,938
------------ -------------- ------------ -------------
1999 Total assets.................... 690,919 798,460 923,520 997,938
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 690,919 798,460 923,520 997,938
------------ -------------- ------------ -------------
2999 Total liabilities............... 690,919 798,460 923,520 997,938
-----------------------------------------------------------------------------------------------

Federal Home Loan Mortgage Corporation

portfolio programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1131 Direct loan obligations exempt
from limitation................. 100,869 49,000 45,000
--------- --------- ----------
1150 Total direct loan obligations... 100,869 49,000 45,000
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 157,165 216,522 236,522
1231 Disbursements: Direct loan
disbursements................... 100,869 49,000 45,000
1251 Repayments: Repayments and
prepayments..................... -41,512 -29,000 -25,000
--------- --------- ----------
1290 Outstanding, end of year........ 216,522 236,522 256,522
---------------------------------------------------------------------------

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 1997,
Freddie Mac held a net mortgage portfolio totaling nearly $164 billion
and had outstanding guaranteed mortgage-backed securities of more than
$579 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 limited 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

[[Page 1231]]

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 1997, Freddie Mac met the low- and moderate-income goal of 42
percent with purchases of 42.9 percent, the underserved area goal of 24
percent with purchases of 26.3 percent, the special affordable goal of
14 percent with purchases of 15.3 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 $1.395 billion in 1997. 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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1101 Federal assets: Fund balances with
Treasury........................
Non-Federal assets:

1201 Investments in non-Federal
securities, net............... 713 4,508 4,508 4,508
1206 Receivables, net................ 9,004 13,404 19,581 28,200
1207 Advances and prepayments........ 482 255 139 81
Other Federal assets:

1801 Cash and other monetary assets.. 5,992 7,695 9,882 12,691
1802 Inventories and related
properties.................... 157,165 216,522 236,522 256,522
1803 Property, plant and equipment,
net........................... 869 964 1,166 1,430
1901 Other assets.................... 10,050 19,908 19,908 19,908
------------ -------------- ------------ -------------
1999 Total assets.................... 184,275 263,256 291,706 323,340
LIABILITIES:
2101 Federal liabilities: Accounts
payable......................... 84 1
Non-Federal liabilities:

2201 Accounts payable................ 856 811 768 727
2202 Interest payable................ 1,719 1,543 1,385 1,243
2203 Debt............................ 160,051 232,994 252,994 272,994
2206 Pension and other actuarial
liabilities................... 7 13 24 44
Other:
2207 Accrued payroll and benefits.. 45 55 67 82
2207 Accrued annual leave (funded
or unfunded)................ 2 1 1 1
2207 Other Liabilities............. 14,363 18,550 24,398 32,566
------------ -------------- ------------ -------------
2999 Total liabilities............... 177,127 253,968 279,637 307,657
NET POSITION:
3200 Invested capital.................. 7,148 9,288 12,069 15,683
------------ -------------- ------------ -------------
3999 Total net position.............. 7,148 9,288 12,069 15,683
------------ -------------- ------------ -------------
4999 Total liabilities and net position 184,275 263,256 291,706 323,340
-----------------------------------------------------------------------------------------------

mortgage-backed securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1131 Direct loan obligations exempt
from limitation................. 217,539 175,000 169,000
--------- --------- ----------
1150 Total direct loan obligations... 217,539 175,000 169,000
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 470,015 490,687 512,268
1231 Disbursements: Direct loan
disbursements................... 217,539 175,000 169,000
1251 Repayments: Repayments and
prepayments..................... -196,867 -153,419 -146,470
--------- --------- ----------
1290 Outstanding, end of year........ 490,687 512,268 534,798
---------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1901 Other Federal assets: Underlying
Mortgages....................... 470,015 490,687 512,268 534,798
------------ -------------- ------------ -------------
1999 Total assets.................... 470,015 490,687 512,268 534,798
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 470,015 490,687 512,268 534,798
------------ -------------- ------------ -------------
2999 Total liabilities............... 470,015 490,687 512,268 534,798
-----------------------------------------------------------------------------------------------

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

[[Page 1232]]

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

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4120-0-3-351 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 8,268 7,685 7,432
--------- --------- ----------
1150 Total direct loan obligations... 8,268 7,685 7,432
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 2,027 1,835 1,852
1231 Disbursements: Direct loan
disbursements................... 8,267 7,171 6,892
1251 Repayments: Repayments and
prepayments..................... -8,449 -7,154 -6,790
1263 Write-offs for default: Direct
loans........................... -10
--------- --------- ----------
1290 Outstanding, end of year........ 1,835 1,852 1,954
---------------------------------------------------------------------------
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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 192 177 165 162
0102 Total interest expense............ -135 -119 -111 -107
------------ -------------- ------------ -------------
0109 Net interest income............... 57 58 54 55
0111 Other income...................... 16 12 10 9
0112 Other expenses.................... -68 -23 -25 -26
------------ -------------- ------------ -------------
0119 Net income........................ -52 -11 -15 -17
------------ -------------- ------------ -------------
0191 Total revenues.................... 208 189 175 171
------------ -------------- ------------ -------------
0192 Total expenses.................... -203 -142 -136 -133
------------ -------------- ------------ -------------
0199 Net income or loss................ 5 47 39 38
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1201 Cash and investment securities.. 306 297 323 328
1206 Accrued interest receivable on
loans......................... 36 32 37 38
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 2,027 1,836 1,854 1,909
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -64 -54 -55 -56
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 1,963 1,782 1,799 1,853
1803 Other Federal assets: Property,
plant and equipment, net........ 132 138 94 99
------------ -------------- ------------ -------------
1999 Total assets.................... 2,437 2,249 2,253 2,318
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 23 26 25 28
Non-Federal liabilities:

Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 2,067 1,826 1,816 1,863
2201 Notes payable and other
interest-bearing liabilities 37 52 45 45
2202 Accrued interest payable........ 21 19 18 17
------------ -------------- ------------ -------------
2999 Total liabilities............... 2,148 1,923 1,904 1,953
NET POSITION:
3300 Cumulative results of operations.. 290 326 350 364
------------ -------------- ------------ -------------
3999 Total net position.............. 290 326 350 364
------------ -------------- ------------ -------------
4999 Total liabilities and net position 2,438 2,249 2,254 2,317
-----------------------------------------------------------------------------------------------
Note.--Loans to cooperatives include nonaccrual loans and sales
contracts.

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

Capital stock and participations
issued.............................. 6 6 5 5
Capital stock and participations
retired............................. 7 17
Surplus retired.......................
Net income............................ 6 44 38 38
Cash/Dividends/Patronage Distributions (1) (14) (12) (12)
Other, net............................
------------ -------------- ------------ -------------
Ending balance of net worth............. 290 326 350 364
-----------------------------------------------------------------------------------------------

Financing Activities (in millions of dollars)

--------------------------------------------------------------------
Identification code 99-4120-0-3-351 1997 actual 1998 actual 1999 est. 2000 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligation............................ 2,336 2,104 1,826 1,816
============== ============== ============= ==============

Consolidated systemwide and other bank
bonds issued........................ 2,659 1,582 1,321 1,155
Consolidated systemwide and other bank
bonds retired....................... 2,695 1,738 1,306 1,123
Consolidated systemwide notes, net.... (196) (122) (25) 15
-------------- -------------- ------------- --------------

Ending balance of outstanding system
obligations........................... 2,104 1,826 1,816 1,863
-------------------------------------------------------------------------------------------------------

Agricultural Credit Banks

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 authori

[[Page 1233]]

ties 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 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 41,710 45,000 50,000
--------- --------- ----------
1150 Total direct loan obligations... 41,710 45,000 50,000
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 14,961 14,776 15,650
1231 Disbursements: Direct loan
disbursements................... 41,710 45,000 50,000
1251 Repayments: Repayments and
prepayments..................... -41,893 -44,121 -49,098
1263 Write-offs for default: Direct
loans........................... -2 -5 -5
--------- --------- ----------
1290 Outstanding, end of year........ 14,776 15,650 16,547
---------------------------------------------------------------------------

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 1,268 1,282 1,288 1,436
0102 Total interest expense............ -970 -983 -987 -1,099
------------ -------------- ------------ -------------
0109 Net interest income............... 298 299 301 337
0111 Other income...................... 23 32 32 26
0112 Other expense..................... -178 -173 -183 -201
------------ -------------- ------------ -------------
0119 Net income........................ -155 -141 -151 -175
------------ -------------- ------------ -------------
0191 Total revenues.................... 1,291 1,314 1,320 1,462
------------ -------------- ------------ -------------
0192 Total expenses.................... -1,148 -1,156 -1,170 -1,300
------------ -------------- ------------ -------------
0199 Net income or loss................ 143 158 150 162
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1201 Cash and investment securities.. 3,452 3,595 3,440 3,350
1206 Accrued interest receivable on
loans......................... 170 159 172 188
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 14,962 14,776 15,650 16,608
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -228 -240 -254 -245
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 14,734 14,536 15,396 16,363
1803 Other Federal assets: Property,
plant and equipment, net........ 124 145 150 129
------------ -------------- ------------ -------------
1999 Total assets.................... 18,480 18,435 19,158 20,030
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 122 179 100 125
Non-Federal liabilities:

Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 16,469 16,253 17,008 17,853
2201 Notes payable and other
interest-bearing liabilities 362 385 400 392
2202 Accrued interest payable........ 161 167 175 175
------------ -------------- ------------ -------------
2999 Total liabilities............... 17,114 16,984 17,683 18,545
NET POSITION:
3300 Cumulative results of operations.. 1,366 1,450 1,475 1,485
------------ -------------- ------------ -------------
3999 Total net position.............. 1,366 1,450 1,475 1,485
------------ -------------- ------------ -------------
4999 Total liabilities and net position 18,480 18,434 19,158 20,030
-----------------------------------------------------------------------------------------------

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

Capital stock and participations
issued.............................. 1
Capital stock and participations
retired............................. 39 42 86 48
Net income............................ 144 156 150 169
Cash/Dividends/Patronage Distributions (34) (34) (40) (40)
Other, net............................ 13 5
------------ -------------- ------------ -------------
Ending balance of net worth............. 1,365 1,450 1,475 1,556
-----------------------------------------------------------------------------------------------

Financing Activities (in millions of dollars)

Consolidated systemwide and other bank
bonds issued........................ 7,548 8,104 8,200 8,300
Consolidated systemwide and other bank
bonds retired....................... 8,420 9,335 7,845 7,751
Consolidated systemwide notes, net.... 1,395 1,015 400 500
------------ -------------- ------------ -------------
Ending balance of outstanding system
obligations......................... 16,469 16,253 17,008 18,057
-----------------------------------------------------------------------------------------------

Farm Credit Banks

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 36,706 36,951 37,770
--------- --------- ----------
1150 Total direct loan obligations... 36,706 36,951 37,770
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 40,998 44,061 45,269
1231 Disbursements: Direct loan
disbursements................... 36,673 36,936 37,754
1251 Repayments: Repayments and
prepayments..................... -33,610 -35,728 -36,480
1264 Write-offs for default: Other
adjustments, net................
--------- --------- ----------
1290 Outstanding, end of year........ 44,061 45,269 46,543
---------------------------------------------------------------------------
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, Sacramento, California; 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, 1998 provided
funds to 32 Federal Land Credit Associations (FLCA), 64 Production
Credit Associations (PCAs), and 57 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 October 1, 1998,
40 Federal Land Bank Associations originated and serviced

[[Page 1234]]

long-term real estate loans for 2 of the 6 FCBs. 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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 3,207 3,348 3,274 3,224
0102 Total interest expense............ -2,482 -2,652 -2,663 -2,666
------------ -------------- ------------ -------------
0109 Net interest income............... 725 696 611 558
0111 Other income...................... 53 55 26 36
0112 Other expenses.................... -304 -279 -264 -234
------------ -------------- ------------ -------------
0119 Net income........................ -251 -224 -238 -198
------------ -------------- ------------ -------------
0191 Total revenues.................... 3,260 3,403 3,300 3,260
------------ -------------- ------------ -------------
0192 Total expenses.................... -2,786 -2,931 -2,927 -2,900
------------ -------------- ------------ -------------
0199 Net income or loss................ 474 472 373 360
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1201 Cash and investment securities.. 7,627 8,727 8,590 8,749
1206 Accrued Interest Receivable..... 781 809 792 795
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 40,998 44,061 45,268 46,542
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -484 -446 -407 -356
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 40,514 43,615 44,861 46,186
1803 Other Federal assets: Property,
plant and equipment, net........ 613 629 621 618
------------ -------------- ------------ -------------
1999 Total assets.................... 49,535 53,780 54,864 56,348
LIABILITIES:
2104 Federal liabilities: Resources
payable to Treasury............. 239 196 240 236
Non-Federal liabilities:

Accounts payable:
2201 Consolidated systemwide and
other bank bonds............ 43,588 47,714 48,761 50,327
2201 Notes payable and other
interest-bearing liabilities 821 901 909 837
2202 Accrued interest payable........ 483 502 531 543
------------ -------------- ------------ -------------
2999 Total liabilities............... 45,131 49,313 50,441 51,943
NET POSITION:
3300 Cumulative results of operations.. 4,404 4,467 4,423 4,405
------------ -------------- ------------ -------------
3999 Total net position.............. 4,404 4,467 4,423 4,405
------------ -------------- ------------ -------------
4999 Total liabilities and net position 49,535 53,780 54,864 56,348
-----------------------------------------------------------------------------------------------

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

Capital stock and participations
issued.............................. 47 67 36 63
Capital stock and participations
retired............................. 55 87 117 176
Net income............................ 474 472 372 362
Cash/Dividends/Patronage Distributions (365) (383) (334) (270)
Other, net............................ 13 (6) (1) 3
------------ -------------- ------------ -------------
Ending balance of net worth............. 4,404 4,467 4,423 4,405
-----------------------------------------------------------------------------------------------

Financing Activities (in millions of dollars)

--------------------------------------------------------------------
Identification code 99-4160-0-3-371 1997 actual 1998 actual 1999 est. 2000 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 41,941 43,588
47,714 48,761
============== ============== ============= ==============

Consolidated systemwide and other bank
bonds issued........................ 41,162 51,216 49,436 50,096
Consolidated systemwide and other bank
bonds retired....................... 39,344 48,689 47,930 48,980
Consolidated systemwide notes, net.... (171) 1,599 (459) 450
-------------- -------------- ------------- --------------

Ending balance of outstanding system
obligations........................... 43,588 47,714
48,761 50,327
-------------------------------------------------------------------------------------------------------

Federal Agricultural Mortgage Corporation

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. 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 required 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 mortgage loans secured by first liens on agricultural real
estate or rural housing (qualified loans), and ``Farmer Mac II,'' which
involves guaranteed portions of USDA guaranteed loans. Farmer Mac
operates by: (i) purchasing, or committing to purchase, newly originated
or existing qualified loans or guaranteed portions from lenders; (ii)
purchasing ``AgVantage'' bonds backed by qualified loans or guaranteed
portions from lenders; and (iii) 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

[[Page 1235]]

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, 1998, 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 1998 actual 1999 est. 2000 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................. 349 436 545
--------- --------- ----------
2150 Total guaranteed loan
commitments................... 349 436 545
----------------------------------------------------------------------------

Cumulative balance of guaranteed loans
outstanding:
2210 Outstanding, start of year........ 814 1,048 1,340
2231 Disbursements of new guaranteed
loans........................... 349 436 545
2251 Repayments and prepayments........ -115 -144 -179
--------- --------- ----------
2290 Outstanding, end of year........ 1,048 1,340 1,706
----------------------------------------------------------------------------

Memorandum:
2299 Guaranteed amount of guaranteed
loans outstanding, end of year.. 1,048 1,340 1,706
---------------------------------------------------------------------------

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
Revenue:
0101 Net Interest Income............... 6 10 12 15
0101 Guarantee Fee Income.............. 2 3 4 5
0101 Gain on Security Issuance......... 2 2 2 3
0101 Other Income......................
0102 Expense........................... -7 -9 -11 -14
------------ -------------- ------------ -------------
0109 Net income or loss (-)............ 3 6 7 9
------------ -------------- ------------ -------------
0199 Net income or loss................ 3 6 7 9
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1201 Investment in securities........ 647 622 622 622
1206 Receivables, net................ 3 2 2 2
1207 Advances and prepayments........ 2 5 7 8
Net value of assets related to
direct loans receivable:

1401 Direct loans receivable, gross.. 461 614 768 960
1402 Interest receivable............. 15 17 21 27
------------ -------------- ------------ -------------
1499 Net present value of assets
related to direct loans..... 476 631 789 987
1801 Other Federal assets: Cash and
other monetary assets........... 246 435 435 435
------------ -------------- ------------ -------------
1999 Total assets.................... 1,374 1,695 1,855 2,054
LIABILITIES:
Non-Federal liabilities:

2201 Accounts payable................ 2 8 11 13
2202 Interest payable................ 8 7 8 11
2203 Debt............................ 1,313 1,598 1,746 1,930
2204 Liabilities for loan guarantees. 1 3 3 4
------------ -------------- ------------ -------------
2999 Total liabilities............... 1,324 1,616 1,768 1,958
NET POSITION:
3200 Invested capital.................. 50 79 87 96
------------ -------------- ------------ -------------
3999 Total net position.............. 50 79 87 96
------------ -------------- ------------ -------------
4999 Total liabilities and net position 1,374 1,695 1,855 2,054
-----------------------------------------------------------------------------------------------

[[Page 1236]]

FEDERAL HOME LOAN BANK SYSTEM

Federal Home Loan Banks

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1998 actual 1999 est. 2000 est.
----------------------------------------------------------------------------
Position with respect to appropriations act
limitation on obligations:
1111 Limitation on direct loans........
1131 Direct loan obligations exempt
from limitation................. 952,121 952,121 952,121
--------- --------- ----------
1150 Total direct loan obligations... 952,121 952,121 952,121
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 181,828 245,647 309,466
1231 Disbursements: Direct loan
disbursements................... 952,121 952,121 952,121
1251 Repayments: Repayments and
prepayments..................... -888,302 -888,302 -888,302
--------- --------- ----------
1290 Outstanding, end of year........ 245,647 309,466 373,285
---------------------------------------------------------------------------

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 6,806 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, 1998 totaled approximately
$245.6 billion, a net increase of approximately $63.8 billion from the
September 30, 1997 level of $181.8 billion.
The principal source of funds for the lending operation is the sale
of consolidated obligations to the public. On September 30, 1998, $336.3
billion of these obligations were outstanding. The consolidated
obligations are not guaranteed by the U.S. Government as to principal or
interest. Other sources of lendable funds include members' deposits and
capital. Deposits totaled $22.7 billion and total capital amounted to
$21.1 billion as of September 30, 1998. 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 1999 and 2000 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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 17,286 20,408 20,408 20,408
0102 Expense (excludes payments to
REFCORP)........................ -15,799 -18,810 -18,810 -18,810
------------ -------------- ------------ -------------
0109 Net income........................ 1,487 1,598 1,598 1,598
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1102 Federal assets: Treasury
securities, net............... 1,739 433 433 433
Non-Federal assets:

1201 Investments in non-Federal
securities, net............... 135,852 135,167 135,167 135,167
1206 Accounts receivable............. 4,604 5,944 5,944 5,944
1401 Net value of assets related to
direct loans receivable: Direct
loans receivable, gross......... 181,828 246,107 309,466 373,285
Other Federal assets:

1801 Cash and other monetary assets.. 457 422 422 422
1803 Property, plant and equipment,
net........................... 149 146 146 146
1901 Other assets.................... 304 175 175 175
------------ -------------- ------------ -------------
1999 Total assets.................... 324,933 388,394 451,753 515,572
LIABILITIES:
2101 Federal liabilities: REFCORP and
Affordable Housing Program...... 439 510 510 510
Non-Federal liabilities:

2201 Accounts payable................ 205 165 165 165
2202 Interest payable................ 4,970 6,427 6,427 6,427
2203 Debt............................ 284,545 336,262 398,023 460,244
Other:
2207 Deposit funds and other
borrowings.................. 15,676 23,550 23,550 23,550
2207 Other......................... 689 354 354 354
------------ -------------- ------------ -------------
2999 Total liabilities............... 306,524 367,268 429,029 491,250
NET POSITION:
3200 Invested capital.................. 18,408 21,126 22,724 24,322
------------ -------------- ------------ -------------
3999 Total net position.............. 18,408 21,126 22,724 24,322
------------ -------------- ------------ -------------
4999 Total liabilities and net position 324,933 388,394 451,753 515,572
-----------------------------------------------------------------------------------------------

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

[[Page 1237]]

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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 915 926 938 951
0102 Expense........................... -795 -795 -795 -795
------------ -------------- ------------ -------------
0109 Net income........................ 120 131 143 156
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1102 Federal assets: Segregated
accounts investment, net...... 1,475 1,606 1,749 1,905
Other Federal assets:

1801 Cash, cash equivalents, and
interest receivable........... 266 266 266 266
1901 Other assets.................... 12 11 11 10
------------ -------------- ------------ -------------
1999 Total assets.................... 1,753 1,884 2,026 2,181
LIABILITIES:
Non-Federal liabilities:

2202 Interest payable................ 236 236 236 236
2203 Debt............................ 8,144 8,145 8,146 8,147
2207 Other........................... 69 67 65 63
------------ -------------- ------------ -------------
2999 Total liabilities............... 8,449 8,447 8,447 8,446
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 -602 -602 -602
3300 Cumulative results of operations.. 796 927 1,069 1,225
------------ -------------- ------------ -------------
3999 Total net position.............. -6,695 -6,563 -6,421 -6,265
------------ -------------- ------------ -------------
4999 Total liabilities and net position 1,754 1,884 2,026 2,181
-----------------------------------------------------------------------------------------------

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.
Until October 29, 1998, REFCORP was subject to the general oversight
and direction of the Thrift Depositor Protection Oversight Board. At
that time, the Oversight Board was abolished and its authority and
duties were transferred to the Secretary of the Treasury. 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 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 and the Secretary of the Treasury 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 1997 actual 1998 actual 1999 est. 2000 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 2,940 2,965 2,995 3,025
0102 Expense........................... -2,626 -2,626 -2,626 -2,626
------------ -------------- ------------ -------------
0109 Net income........................ 314 339 369 399
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1102 Federal assets: Principal fund
account investment, net....... 4,168 4,504 4,868 5,263
1206 Non-Federal assets: Assessments
receivable for interest expense. 888 888 881 881
------------ -------------- ------------ -------------
1999 Total assets.................... 5,056 5,393 5,750 6,144
LIABILITIES:
Non-Federal liabilities:

2202 Accrued interest payable on
long-term obligations......... 888 888 881 881
2203 Debt............................ 30,072 30,069 30,067 30,065
------------ -------------- ------------ -------------
2999 Total liabilities............... 30,960 30,957 30,948 30,945
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 1,056 1,056 1,056
3300 Cumulative results of operations.. 1,813 2,153 2,519 2,916
------------ -------------- ------------ -------------
3999 Total net position.............. -25,903 -25,564 -25,198 -24,801
------------ -------------- ------------ -------------
4999 Total liabilities and net position 5,057 5,393 5,750 6,144
-----------------------------------------------------------------------------------------------

BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM

Program and Financing (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4450-0-3-803 1997 actual 1998 est. 1999 est.
----------------------------------------------------------------------------

Obligations by program activity:
09.01 Monetary and economic policy...... 75 82 84
09.02 Services to financial institutions
and the public.................. 4 4 4
09.03 Supervision and regulation of
financial institutions.......... 67 71 73
09.04 System policy direction and
oversight....................... 33 34 35
--------- --------- ----------
09.09 Subtotal: Board operating
expenses...................... 179 191 196
09.10 Office of Inspector General
operating expenses.............. 3 3 3
--------- --------- ----------
10.00 Total new obligations........... 182 194 199
----------------------------------------------------------------------------

Budgetary resources available for obligation:
22.00 New budget authority (gross)...... 182 194 199

[[Page 1238]]

23.95 Total new obligations............. -182 -194 -199
----------------------------------------------------------------------------

New budget authority (gross), detail:
68.00 Spending authority from offsetting
collections (gross): Offsetting
collections (cash).............. 182 194 199
----------------------------------------------------------------------------

Change in unpaid obligations:
72.40 Unpaid obligations, start of year:
Obligated balance, start of year 26 26 26
73.10 Total new obligations............. 182 194 199
73.20 Total outlays (gross)............. -182 -194 -199
74.40 Unpaid obligations, end of year:
Obligated balance, end of year.. 26 26 26
----------------------------------------------------------------------------

Outlays (gross), detail:
86.97 Outlays from new permanent
authority....................... 166 179 184
86.98 Outlays from permanent balances... 16 15 15
--------- --------- ----------
87.00 Total outlays (gross)........... 182 194 199
----------------------------------------------------------------------------

Offsets:
Against gross budget authority and outlays:

88.40 Offsetting collections (cash)
from: Non-Federal sources..... -182 -194 -199
----------------------------------------------------------------------------

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

Object Classification (in millions of dollars)

Reimbursable obligations:

Personnel compensation:
11.1 Full-time permanent........... 103 107 111
11.3 Other than full-time permanent 2 2 2
11.5 Other personnel compensation.. 2 2 2
--------- --------- ----------
11.9 Total personnel compensation 107 111 115
12.1 Civilian personnel benefits..... 19 16 17
21.0 Travel and transportation of
persons....................... 4 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 2 2 2
25.2 Other services.................. 15 21 26
26.0 Supplies and materials.......... 6 8 8
31.0 Equipment....................... 13 15 10
--------- --------- ----------
99.0 Subtotal, reimbursable
obligations................. 179 191 196
25.2 Allocation Account: Other services 3 3 3
--------- --------- ----------
99.9 Total new obligations........... 182 194 199
---------------------------------------------------------------------------