Appendix - Estimates for Government-Sponsored Enterprises

[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)

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)

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)

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)

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)

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)

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)

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)

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
-----------------------------------------------------------------------------------------------