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


    This chapter contains descriptions of and data on the Government-
sponsored enterprises listed below. These enterprises were established 
and chartered by the Federal Government for public policy purposes. They 
are not included in the Federal budget because they are private 
companies. However, because of their public purpose, 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 and the Federal Home 
        Loan Mortgage Corporation provide   assistance to the secondary 
        market for residential mortgages. 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.

    --Institutions of the Farm Credit System the 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.


 
                   STUDENT LOAN MARKETING ASSOCIATION

                   Student Loan Marketing Association

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-1500              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........      14,023       5,989       9,146
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      14,023       5,989       9,146
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      29,468      37,797      33,870
1231  Disbursements: Direct loan 
        disbursements...................      14,023       8,989       9,146
      Repayments:

1251    Repayments and prepayments......      -3,986      -4,125      -3,364
1252    Proceeds from loan asset sales 
          or discounted.................      -1,971      -9,000     -12,000
1264  Write-offs for default: Other 
        adjustments, net................         263         209         188
                                           ---------   ---------  ----------
1290    Outstanding, end of year........      37,797      33,870      27,840
---------------------------------------------------------------------------

    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 7, 1997.
    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. The 1999 loan volume amounts reflect the 
purchase of the Nellie Mae Corporation, including its $2.6 billion 
student loan portfolio.

                          ANNUAL LOAN ACTIVITY

                        [In millions of dollars]

                                     1999 actual  2000 est.   2001 est.
Guaranteed student loans:
  Stafford:
    Purchased.......................      10,716       7,043       7,292
    Warehoused......................         713         300         150
  PLUS/SLS: Purchased...............       1,121         732         758
  Consolidations....................         909         594         614
  Health professions loans; 
    Purchased.......................          69
                                    ------------------------------------
      Subtotal, Guaranteed student 
        loans.......................      13,528       8,669       8,814
Other...............................         495         320         332
                                    ------------------------------------
      Total.........................      14,023       8,989       9,146
                                    ====================================

    Financing.--The GSE is financed by borrowing in the private debt 
markets and securitizing its assets. 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.
    The financial data contained in this material relating to future 
periods represents estimates that have been prepared specifically for 
inclusion in the President's Budget. These data should not be viewed as 
official forecasts 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.

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-1500            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................       3,116          2,854
0102  Expense...........................      -2,595         -2,391
                                        ------------ --------------  ------------  -------------
0105  Net income or loss (-)............         521            463
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-1500            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102    Treasury securities, par........       1,404          1,401         1,429          1,458
1104    Agency securities, par..........
1106    Receivables, net................         669            942           848            678
1201  Investments in other securities, 
        net.............................       2,728          2,009         1,543            864
1206  Receivables, net..................         706            684           616            431
1207  Advances and prepayments..........          15             16            17             18
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Direct loans, gross.............      29,586         37,947        34,005         27,951
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................        -118           -150          -135           -111
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................      29,468         37,797        33,870         27,840
1801  Cash and other monetary assets....          50             38            40             42
1803  Property, plant and equipment, net         182            172           180            189
1901  Other assets......................         358            435           457            480
                                        ------------ --------------  ------------  -------------
1999    Total assets....................      35,580         43,494        39,000         32,000
    LIABILITIES:
2202  Interest payable..................         300            293           264            238
2203  Debt..............................      33,517         41,591        37,125         30,215
2207  Other.............................         883            677           711            747
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............      34,700         42,561        38,100         31,200
    NET POSITION:
3300  Invested Capital..................         880            933           900            800
                                        ------------ --------------  ------------  -------------
3999    Total net position..............         880            933           900            800
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position      35,580         43,494        39,000         32,000
-----------------------------------------------------------------------------------------------

                                


 
                  FEDERAL NATIONAL MORTGAGE ASSOCIATION

                           Portfolio Programs

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-2500              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........     201,660     133,917     152,021
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....     201,660     133,917     152,021
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........     393,210     518,629     599,719
      Disbursements:

1231    Direct loan disbursements.......     208,542     132,281     151,144
1232    Purchase of loans assets........      19,258         335         362
1251  Repayments: Repayments and 
        prepayments.....................    -100,348     -51,525     -59,117
1264  Write-offs for default: Other 
        adjustments, net................      -2,033
                                           ---------   ---------  ----------
1290    Outstanding, end of year........     518,629     599,719     692,108
---------------------------------------------------------------------------

    The Federal National Mortgage Association (Fannie Mae) is a 
federally-chartered, privately-owned company with a public mission to 
provide stability and to 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, Fannie Mae engages primarily in two forms of 
business: investing in portfolios of residential mortgages and 
guaranteeing residential mortgage securities. As of September 30, 1999, 
Fannie Mae held a net mortgage portfolio totaling $504 billion and had 
net outstanding guaranteed mortgage-backed securities of over $670 
billion.
    Through a federal charter, Congress has equipped Fannie Mae with 
certain attributes to help it carry out its public mission. 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 conditional 
access to a $2.25 billion line of credit from the U.S. Treasury. 
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, is 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.''
    In December 1995, the U.S. Department of Housing and Urban 
Development (HUD) set affordable housing goals for 1996-1999 and 
established 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 goal is 42 percent; the 
geographically targeted goal is 24 percent and the special affordable 
housing goal is 14 percent. Fannie Mae exceeded all of the housing goals 
in 1998 with low- and moderate-income purchases at 44.1 percent, 
geographically targeted purchases at 27 percent, and special affordable 
housing purchases at 14.3 percent.
    HUD is publishing a proposed rule for public comment that would set 
new affordable housing goals for the period covering 2000 to 2003. After 
a transition period, the goals would be 50 percent for the low- and 
moderate-income goal, 31 percent for the geographically targeted goal, 
and 20 percent for the special affordable housing goal.
    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 1999 was $17.9 
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.
    Through the third quarter of 1999, Fannie Mae earned $2.87 billion.
    Income and retained earnings for the years ended September 30, 1998 
and 1999 follow (in thousands of dollars):

                                          1998 actual     1999 actual
Gross revenue...........................    30,510,100      35,255,700
Gross expenses..........................    25,885,200      30,289,400
                                         -------------  --------------

  Income before Federal income tax......     4,624,900       4,966,300
Federal income tax......................     1,365,800       1,280,300
                                         -------------  --------------

  Net income............................     3,259,100       3,686,000
Retained earnings, beginning of year....    12,766,100      15,064,600
Dividends on common stock...............     (960,600)     (1,076,500)
                                         -------------  --------------

  Retained earnings, end of year........    15,064,600      17,674,100
                                         -------------  --------------

    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.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-2500            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1101  Fund balances.....................          19              4
      Investments in US securities:

1102    Treasury securities, par........         123             34
1104    Other...........................      68,714         36,498        44,772         48,800
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Direct loans (net of discount)..     362,478        477,130       580,250        670,984
1602    Federal Agencies................      13,854         27,367         4,164          4,081
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................        -254           -194          -188           -190
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................     376,078        504,303       584,226        674,875
1801  Cash and other monetary assets....       9,974         10,513        10,622         12,029
1803  Property, plant and equipment, net         191            180
                                        ------------ --------------  ------------  -------------
1999    Total assets....................     455,099        551,532       639,620        735,704
    LIABILITIES:
2101  Accounts payable..................         400            254
2102  Accrued interest payable..........       5,544          6,574         7,198          8,341
2105  Other.............................           8             11
2203  Debt..............................     430,582        524,879       609,566        702,060
2204  Estimated liability for loan 
        guarantees......................       3,135          2,311         3,035          2,863
2206  Pension and other actuarial 
        liabilities.....................         225            288
2207  Subtotal, Federal taxes payable...         353            160
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............     440,247        534,477       619,799        713,264
    NET POSITION:
      Cumulative results of operations:

3300    Cumulative results of operations      15,065         17,674        20,730         24,170
3300    Change in Stockholder Equity....        -213           -619          -909         -1,730
                                        ------------ --------------  ------------  -------------
3999    Total net position..............      14,852         17,055        19,821         22,440
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position     455,099        551,532       639,620        735,704
-----------------------------------------------------------------------------------------------

                                

                         mortgage-backed securities

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-2501              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........     297,503     208,781     228,595
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....     297,503     208,781     228,595
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........     798,460     938,484   1,033,975
1231  Disbursements: Direct loan 
        disbursements...................     348,792     208,781     228,595
1251  Repayments: Repayments and 
        prepayments.....................    -208,768    -113,290    -122,309
                                           ---------   ---------  ----------
1290    Outstanding, end of year........     938,484   1,033,975   1,140,261
---------------------------------------------------------------------------

    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 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.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-2501            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Direct loans, gross.............     799,006        939,092     1,034,576      1,140,862
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................        -546           -608          -601           -600
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................     798,460        938,484     1,033,975      1,140,261
                                        ------------ --------------  ------------  -------------
1999    Total assets....................     798,460        938,484     1,033,975      1,140,261
    LIABILITIES:
2104  Resources payable.................     798,460        938,484     1,033,975      1,140,261
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............     798,460        938,484     1,033,975      1,140,261
-----------------------------------------------------------------------------------------------

                                


 
                 FEDERAL HOME LOAN MORTGAGE CORPORATION

                           Portfolio Programs

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4420              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........     156,862      69,700      77,500
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....     156,862      69,700      77,500
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........     216,522     315,968     355,811
1231  Disbursements: Direct loan 
        disbursements...................     156,862      69,700      77,500
1251  Repayments: Repayments and 
        prepayments.....................     -57,416     -29,857     -37,492
                                           ---------   ---------  ----------
1290    Outstanding, end of year........     315,968     355,811     395,819
---------------------------------------------------------------------------

    The 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. As of September 30, 1999, 
Freddie Mac held a mortgage portfolio totaling $315 billion and had 
outstanding guaranteed mortgage-backed securities of $739 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 
conditional access to a $2.25 billion line of credit from the U.S. 
Treasury. 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. In 
December 1995, the U.S. Department of Housing and Urban Development 
(HUD) affordable housing goals for 1996-1999 and established 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, 42 percent meet the low- and 
moderate-income goal, 24 percent meet the geographically targeted goal, 
and 14 percent meet the special affordable goal.
    Freddie Mac exceeded all of the housing goals in 1998 with low- and 
moderate-income purchases of 42.9 percent, geographically targeted 
purchases of 26.1 percent, special affordable purchases of 15.9 percent, 
and the multifamily portion of the special affordable purchases of $2.7 
billion in qualifying multifamily mortgages.
    HUD is publishing a proposed rule for public comment that would set 
new affordable housing goals for the period covering 2000 to 2003. After 
a transition period, the goals would be 50 percent for the low- and 
moderate-income goal, 31 percent for the geographically targeted goal, 
and 20 percent for the special affordable housing goal.
    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.
    Through the third quarter of 1999, Freddie Mac recorded net income 
of $1.63 billion.
    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)

-----------------------------------------------------------------------------------------------
                      99-4420            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Investments in other securities, 
        net.............................      30,825         26,515        48,265         49,965
1206  Receivables, net..................      12,271         18,643        18,532         18,413
1207  Advances and prepayments..........         255            487           507            507
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Retained mortgage inventory.....     216,522        315,968       355,811        395,819
1603    Allowances (-)..................        -294           -467          -742         -1,179
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................     216,228        315,501       355,069        394,640
1801  Cash and other monetary assets....       1,286          1,992         2,000          2,000
1803  Property, plant and equipment, net       1,153          1,251         1,384          1,571
1901  Other assets......................       1,238            496         1,351          1,856
                                        ------------ --------------  ------------  -------------
1999    Total assets....................     263,256        364,885       427,108        468,952
    LIABILITIES:
2101  Accounts payable..................           1            115
2201  Accounts payable..................         804          2,146         3,002          2,951
2202  Interest payable..................       1,543          2,311         3,373          4,366
2203  Debt..............................     236,387        341,014       403,441        442,529
2206  Pension and other actuarial 
        liabilities.....................          13             19            28             41
      Other:

2207    Accrued payroll and benefits....          62             82           108            142
2207    Accrued annual leave (funded or 
          unfunded).....................           1              2             4              8
2207    Other Liabilities...............      15,157          8,056         4,117          4,266
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............     253,968        353,745       414,073        454,303
    NET POSITION:
3100  Invested capital..................       9,288         11,140        13,035         14,649
                                        ------------ --------------  ------------  -------------
3999    Total net position..............       9,288         11,140        13,035         14,649
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position     263,256        364,885       427,108        468,952
-----------------------------------------------------------------------------------------------

                                

                       Mortgage-Backed Securities

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4440              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........     270,798     162,000     188,900
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....     270,798     162,000     188,900
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........     490,687     529,213     616,832
1231  Disbursements: Direct loan 
        disbursements...................     270,798     162,000     188,900
1251  Repayments: Repayments and 
        prepayments.....................    -232,272     -74,381     -87,360
                                           ---------   ---------  ----------
1290    Outstanding, end of year........     529,213     616,832     718,372
---------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4440            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1901  Underlying Mortgages..............     490,687        529,231       616,832        718,372
                                        ------------ --------------  ------------  -------------
1999    Total assets....................     490,687        529,231       616,832        718,372
    LIABILITIES:
2104  Resources payable.................     490,687        529,213       616,832        718,372
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............     490,687        529,213       616,832        718,372
-----------------------------------------------------------------------------------------------

                                


 
                           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) 
Agricultural Credit Bank (ACB), (2) Farm Credit Banks (FCB), and (3) 
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).

                                

                        Agricultural Credit Bank

    On July 1, 1999, the remaining cooperative entity, the St. Paul Bank 
for Cooperatives, merged into 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 Bank for Cooperatives (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 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). CoBank also makes loans to rural 
utilities, including telecommunications companies and it provides 
international loans for the financing of agricultural exports.

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4130              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........      49,522      50,000      50,000
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      49,522      50,000      50,000
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      16,612      18,093      18,545
1231  Disbursements: Direct loan 
        disbursements...................      49,503      50,000      50,000
1251  Repayments: Repayments and 
        prepayments.....................     -47,884     -49,532     -48,808
1263  Write-offs for default: Direct 
        loans...........................        -138         -16         -16
                                           ---------   ---------  ----------
1290    Outstanding, end of year........      18,093      18,545      19,721
---------------------------------------------------------------------------

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4130            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
0101  Total interest income.............       1,460          1,424         1,493          1,592
0102  Total interest expense............      -1,103         -1,063        -1,116         -1,191
                                        ------------ --------------  ------------  -------------
0105  Net income or loss (-)............         357            361           377            401
0111  Other income......................          35             46            49             52
0112  Other expense.....................        -201           -323          -246           -249
                                        ------------ --------------  ------------  -------------
0115  Net income or loss (-)............        -166           -277          -197           -197
                                        ------------ --------------  ------------  -------------
0191  Total revenues....................       1,495          1,470         1,542          1,644
                                        ------------ --------------  ------------  -------------
0192  Total expenses....................      -1,304         -1,386        -1,362         -1,440
                                        ------------ --------------  ------------  -------------
0195  Total income or loss (-)..........         191             84           180            204
                                        ------------ --------------  ------------  -------------
0199  Total comprehensive income........         191             84           180            204
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4130            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Cash and investment securities....       3,892          3,755         3,848          4,093
1206  Accrued interest receivable on 
        loans...........................         190            182           187            198
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Direct loans, gross.............      16,612         18,093        18,545         19,721
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................        -294           -314          -322           -342
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................      16,318         17,779        18,223         19,379
1803  Property, plant and equipment, net         204            159           178            178
                                        ------------ --------------  ------------  -------------
1999    Total assets....................      20,604         21,875        22,436         23,848
    LIABILITIES:
2104  Resources payable.................         206            167           174            178
      Accounts payable:

2201    Consolidated systemwide and 
          other bank bonds..............      18,079         19,468        19,954         21,220
2201    Notes payable and other 
          interest-bearing liabilities..         437            351           360            383
2202  Accrued interest payable..........         186            228           234            248
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............      18,908         20,214        20,722         22,029
    NET POSITION:
3300  Cumulative results of operations..       1,697          1,660         1,714          1,818
                                        ------------ --------------  ------------  -------------
3999    Total net position..............       1,697          1,660         1,714          1,818
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position      20,605         21,874        22,436         23,847
-----------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------
                      99-4130            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth..........       1,582          1,697         1,660          1,714
                                        ============ ==============  ============  =============

  Capital stock and participations 
    issued..............................           7              5             5              5
  Capital stock and participations 
    retired.............................          40             80            90             65
  Net income............................         191             84           179            204
  Cash/Dividends/Patronage Distributions         -48            -27           -40            -40
  Other, net............................           5           (19)             0              0
                                        ------------ --------------  ------------  -------------
Ending balance of net worth.............       1,697          1,660         1,714          1,818
-----------------------------------------------------------------------------------------------

                         Financing Activities (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4130            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
Beginning balance of outstanding system 
    obligations.........................      18,573         18,079        19,468         19,954
                                        ============ ==============  ============  =============

  Consolidated systemwide and other bank 
    bonds issued........................       9,686         11,875        12,000         12,000
  Consolidated systemwide and other bank 
    bonds retired.......................      11,073          9,657        11,913         11,235
  Consolidated systemwide notes, net....         893           -829           400            500
                                        ------------ --------------  ------------  -------------
Ending balance of outstanding system 
    obligations.........................      18,079         19,468        19,954         21,220
-----------------------------------------------------------------------------------------------

                                

                            Farm Credit Banks

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4160              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........      38,051      40,530      39,957
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      38,051      40,530      39,957
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      44,061      45,823      46,966
1231  Disbursements: Direct loan 
        disbursements...................      38,015      40,483      39,402
1251  Repayments: Repayments and 
        prepayments.....................     -36,182     -39,340     -37,429
1264  Write-offs for default: Other 
        adjustments, net................         -71
                                           ---------   ---------  ----------
1290    Outstanding, end of year........      45,823      46,966      48,939
---------------------------------------------------------------------------
    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, 1999 provided 
funds to 50 Federal Land Credit Associations (FLCA), 60 Production 
Credit Associations (PCAs), and 49 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, 1999, 
18 Federal Land Bank Associations originated and serviced 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)

-----------------------------------------------------------------------------------------------
                      99-4160            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
0101  Total interest income.............       3,348          3,317         3,413          3,562
0102  Total interest expense............      -2,652         -2,662        -2,885         -3,085
                                        ------------ --------------  ------------  -------------
0105  Net income or loss (-)............         696            655           528            477
0111  Other income......................          55             59            41             43
0112  Other expenses....................        -279           -325          -251           -244
                                        ------------ --------------  ------------  -------------
0115  Net income or loss (-)............        -224           -266          -210           -201
                                        ------------ --------------  ------------  -------------
0191  Total revenues....................       3,403          3,376         3,454          3,605
                                        ------------ --------------  ------------  -------------
0192  Total expenses....................      -2,931         -2,987        -3,136         -3,329
                                        ------------ --------------  ------------  -------------
0195  Total income or loss (-)..........         472            389           318            276
                                        ------------ --------------  ------------  -------------
0199  Total comprehensive income........         472            389           318            276
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4160            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Cash and investment securities....       8,727          9,590         9,554          9,636
1206  Accrued Interest Receivable.......         809            790           698            703
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601    Direct loans, gross.............      44,061         45,823        46,967         48,984
1603    Allowance for estimated 
          uncollectible loans and 
          interest (-)..................        -446           -358          -254           -244
                                        ------------ --------------  ------------  -------------
1699      Value of assets related to 
            direct loans................      43,615         45,465        46,713         48,740
1803  Property, plant and equipment, net         629            336           332            334
                                        ------------ --------------  ------------  -------------
1999    Total assets....................      53,780         56,181        57,297         59,413
    LIABILITIES:
2104  Resources payable.................         196            222           248            249
      Accounts payable:

2201    Consolidated systemwide and 
          other bank bonds..............      47,714         50,087        51,905         54,074
2201    Notes payable and other 
          interest-bearing liabilities..         901            902           324            192
2202  Accrued interest payable..........         502            547           534            548
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............      49,313         51,758        53,011         55,063
    NET POSITION:
3300  Cumulative results of operations..       4,467          4,423         4,285          4,350
                                        ------------ --------------  ------------  -------------
3999    Total net position..............       4,467          4,423         4,285          4,350
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position      53,780         56,181        57,296         59,413
-----------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------
                      99-4160            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth..........       4,404          4,467         4,423          4,285
                                        ============ ==============  ============  =============

  Capital stock and participations 
    issued..............................          67             68            92             36
  Capital stock and participations 
    retired.............................          87            124           184             18
  Surplus Retired.......................                                       85
  Net income............................         472            389           318            276
  Cash/Dividends/Patronage Distributions       (383)          (342)         (267)          (230)
  Other, net............................          -7            -35           -12
                                        ------------ --------------  ------------  -------------
Ending balance of net worth.............       4,467          4,423         4,285          4,350
-----------------------------------------------------------------------------------------------

              Financing Activities (in millions of dollars)

    --------------------------------------------------------------------
                    99-4160                 1998 actual     1999 actual      2000 est.      2001 est.
    --------------------------------------------------------------------
Beginning balance of outstanding system 
  obligations...........................           43,588          47,714         50,087          53,646
                                           ==============  ==============  =============  ==============

  Consolidated systemwide and other bank 
    bonds issued........................           51,216          43,119         44,444          45,020
  Consolidated systemwide and other bank 
    bonds retired.......................           48,689          39,878         38,882          41,175
  Consolidated systemwide notes, net....            1,599            -868         -2,003              34
                                           --------------  --------------  -------------  --------------

Ending balance of outstanding system 
  obligations...........................           47,714          50,087         53,646          57,524
-------------------------------------------------------------------------------------------------------

                                

                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.
    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 come 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.
    Farmer Mac must maintain core and risk based capital as provided in 
the Act and FCA regulations.
    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 establishment of risk-based 
capital requirements by regulation. On November 12, 1999, FCA published 
a notice of proposed rulemaking, stress test, and a request for public 
comments. Following the comment period, a final risk-based capital rule 
and stress test will be developed by FCA and published in the Federal 
Register. 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, 1999, Farmer Mac's total capital exceeds regulatory and 
statutory requirements. Lastly, in connection with the enactment of the 
1996 Act, Congress requested, during Farmer Mac's transition to the 
expanded capital requirements thereunder, that FCA, in a cooperative 
effort with the U.S. Treasury, monitor Farmer Mac's financial condition 
and report to Congress semiannually.

             Status of Guaranteed Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4180              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
2111  Limitation on guaranteed loans....       1,662       2,077       2,597
2131  Guaranteed loan commitments.......       1,662       2,077       2,597
                                           ---------   ---------  ----------
2150  Total guaranteed loan commitments.       3,324       4,154       5,194
----------------------------------------------------------------------------

    Cumulative balance of guaranteed loans 
                outstanding:
2210  Outstanding, start of year........       1,048       2,057       3,318
2231  Disbursements of new guaranteed 
        loans...........................       1,662       2,077       2,597
2251  Repayments and prepayments........        -653        -816      -1,021
                                           ---------   ---------  ----------
2290    Outstanding, end of year........       2,057       3,318       4,894
----------------------------------------------------------------------------

    Memorandum:
2299  Guaranteed amount of guaranteed 
        loans outstanding, end of year..       2,057       3,318       4,894
---------------------------------------------------------------------------

                        Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4180            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    Revenue:
0101  Net Interest Income...............           6             14            18             22
0101  Guarantee Fee Income..............           2              6             8             10
0101  Gain on Security Issuance.........           2
0102  Expense...........................          -7            -14           -18            -23
                                        ------------ --------------  ------------  -------------
0105  Net income or loss (-)............           3              6             8              9
                                        ------------ --------------  ------------  -------------
0199  Total comprehensive income........           3              7             9              9
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4180            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Investment in securities..........         622            853           853            853
1206  Receivables, net..................           2              3             3              4
1207  Advances and prepayments..........           5             12            15             18
      Net value of assets related to 
          direct loans receivable:

1401    Direct loans receivable, gross..         614          1,278         1,598          1,998
1402    Interest receivable.............          17             30            37             46
                                        ------------ --------------  ------------  -------------
1499      Net present value of assets 
            related to direct loans.....         631          1,308         1,635          2,044
1801  Cash and other monetary assets....         435            506           476             89
                                        ------------ --------------  ------------  -------------
1999    Total assets....................       1,695          2,682         2,982          3,008
    LIABILITIES:
2201  Accounts payable..................           8              4             4              6
2202  Interest payable..................           7             12            15             18
2203  Debt..............................       1,598          2,573         2,861          2,870
2204  Liabilities for loan guarantees...           3              6             7              9
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............       1,616          2,595         2,887          2,903
    NET POSITION:
3300  Invested capital..................          79             87            95            105
                                        ------------ --------------  ------------  -------------
3999    Total net position..............          79             87            95            105
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position       1,695          2,682         2,982          3,008
-----------------------------------------------------------------------------------------------

                                


 
                      FEDERAL HOME LOAN BANK SYSTEM

                         Federal Home Loan Banks

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
                    99-4200              1999 actual   2000 est.   2001 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........   2,181,262   2,181,262   2,181,262
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....   2,181,262   2,181,262   2,181,262
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........     245,647     366,842     368,885
1231  Disbursements: Direct loan 
        disbursements...................   2,181,262   2,181,262   2,181,262
1251  Repayments: Repayments and 
        prepayments.....................   2,060,067   2,179,219   2,179,219
                                           ---------   ---------  ----------
1290    Outstanding, end of year........     366,842     368,885     370,928
---------------------------------------------------------------------------

    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. To accomplish 
this mission, the FHLBanks make loans, called advances, and provide 
other credit products and services to their 7,226 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. However, ``community 
financial institutions'' may also use long-term advances to finance 
small businesses, small farms, and small agribusinesses. Additionally, 
specialized advance programs provide funds for community reinvestment 
and affordable housing programs. All regulated financial depositories, 
``community financial institutions,'' 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, 1999 totaled approximately 
$367 billion, a net increase of approximately $120 billion from the 
September 30, 1998 level of $246 billion.
    The principal source of funds for the lending operation is the sale 
of consolidated obligations to the public. On September 30, 1999, $477 
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 $16 billion and total capital amounted to $27 
billion as of September 30, 1999. 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 the greater of $100 million annually or 10 
percent of the preceding year's net income. The Act also requires that 
the FHLBanks contribute 20 percent of net earnings annually to assist in 
the payment of interest on bonds issued by the Resolution Funding 
Corporation.
    The forecast data for 2000 and 2001 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)

-----------------------------------------------------------------------------------------------
                      99-4200            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
0101  Revenue...........................      20,408         24,596        24,596         24,596
0102  Expense (excludes payments to 
        REFCORP)........................     -18,810        -22,553       -22,553        -22,553
                                        ------------ --------------  ------------  -------------
0105  Net income or loss (-)............       1,598          2,043         2,043          2,043
-----------------------------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
                      99-4200            1998 actual    1999 actual     2000 est.      2001 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102    Treasury securities, net........         433            233           233            233
1201  Investments in other securities, 
        net.............................     135,167        155,471       155,471        155,471
1206  Accounts receivable...............       5,944          8,057         8,057          8,057
1401  Net value of assets related to 
        direct loans receivable: Direct 
        loans receivable, gross.........     246,107        366,842       368,885        370,928
1801  Cash and other monetary assets....         422            399           399            399
1803  Property, plant and equipment, net         146             88            88             88
1901  Other assets......................         175            261           261            261
                                        ------------ --------------  ------------  -------------
1999    Total assets....................     388,394        531,351       533,394        535,437
    LIABILITIES:
2101  REFCORP and Affordable Housing 
        Program.........................         510            580           580            580
2201  Accounts payable..................         165             59            59             59
2202  Interest payable..................       6,427          8,709         8,709          8,709
2203  Debt..............................     336,262        477,472       477,472        477,472
      Other:

2207    Deposit funds and other 
          borrowings....................      23,550         16,147        16,147         16,147
2207    Other...........................         354          1,452         1,452          1,452
                                        ------------ --------------  ------------  -------------
2999    Total liabilities...............     367,268        504,419       504,419        504,419
    NET POSITION:
3100  Invested capital..................      21,126         26,932        28,975         31,018
                                        ------------ --------------  ------------  -------------
3999    Total net position..............      21,126         26,932        28,975         31,018
                                        ------------ --------------  ------------  -------------
4999  Total liabilities and net position     388,394        531,351       533,394        535,437
-----------------------------------------------------------------------------------------------

                                
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