Appendix - Government-Sponsored Enterprises

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

GOVERNMENT-SPONSORED ENTERPRISES

This chapter contains descriptions of and data on the Government-
sponsored enterprises listed below. These enterprises were established
and chartered by the Federal Government 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)

----------------------------------------------------------------------------
Identification code 99-1500-0-3-502 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1111 Limitation on direct loans........
1131 Direct loan obligations........... 13,904 11,294 12,284
--------- --------- ----------
1150 Total direct loan obligations..... 13,904 11,294 12,284
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 37,797 37,213 31,833
1231 Disbursements: Direct loan
disbursements................... 13,904 11,294 12,284
Repayments:

1251 Repayments and prepayments...... -5,712 -4,834 -3,187
1252 Proceeds from loan asset sales
or discounted................. -8,975 -12,000 -12,000
1264 Write-offs for default: Other
adjustments, net................ 199 160 144
--------- --------- ----------
1290 Outstanding, end of year........ 37,213 31,833 29,074
---------------------------------------------------------------------------

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 USA Education, Inc. and
must wind down and be liquidated by September 30, 2008. Under
legislation passed in 1998, if USA Education, Inc. 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.

ANNUAL LOAN ACTIVITY

[In millions of dollars]

2000 actual 2001 est. 2002 est.
Guaranteed student loans:
Stafford:
Purchased....................... 9,550 9,416 10,393
Warehoused...................... 1,100 300 150
PLUS/SLS: Purchased............... 1,102 990 1,092
Health professions loans;
Purchased....................... 1
------------------------------------
Subtotal, Guaranteed student
loans....................... 11,753 10,706 11,635
Other............................... 2,151 588 649
------------------------------------
Total......................... 13,904 11,294 12,284
====================================

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 adjust

[[Page 1238]]

able 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)

-----------------------------------------------------------------------------------------------
Identification code 99-1500-0-3-502 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 2,854 3,647
0102 Expense........................... -2,391 -3,160
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 463 487
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1102 Treasury securities, par........ 1,401 1,363 1,391 1,419
1104 Agency securities, par..........
1106 Receivables, net................ 942 1,090 981 883
1201 Investments in other securities,
net............................. 2,009 2,393 2,310 2,483
1206 Receivables, net.................. 684 916 825 743
1207 Advances and prepayments.......... 16 21 22 23
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 37,947 37,317 31,922 29,155
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -150 -104 -89 -81
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 37,797 37,213 31,833 29,074
1801 Cash and other monetary assets.... 38 134 141 148
1803 Property, plant and equipment, net 172 163 171 180
1901 Other assets...................... 435 407 426 447
------------ -------------- ------------ -------------
1999 Total assets.................... 43,494 43,700 38,100 35,400
LIABILITIES:
2202 Interest payable.................. 293 417 375 338
2203 Debt.............................. 41,591 41,501 36,083 33,483
2207 Other............................. 677 707 742 779
------------ -------------- ------------ -------------
2999 Total liabilities............... 42,561 42,625 37,200 34,600
NET POSITION:
3300 Invested Capital.................. 933 1,075 900 800
------------ -------------- ------------ -------------
3999 Total net position.............. 933 1,075 900 800
------------ -------------- ------------ -------------
4999 Total liabilities and net position 43,494 43,700 38,100 35,400
-----------------------------------------------------------------------------------------------

FEDERAL NATIONAL MORTGAGE ASSOCIATION

Portfolio Programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2500-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 133,266 172,261 198,760
--------- --------- ----------
1150 Total direct loan obligations..... 133,266 172,261 198,760
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 518,629 587,600 693,238
Disbursements:

1231 Direct loan disbursements....... 125,681 162,755 197,223
1232 Purchase of loans assets........ 11,747 536 170
1251 Repayments: Repayments and
prepayments..................... -67,233 -57,653 -98,035
1264 Write-offs for default: Other
adjustments, net................ -1,224
--------- --------- ----------
1290 Outstanding, end of year........ 587,600 693,238 792,596
---------------------------------------------------------------------------

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, 2000,
Fannie Mae held a net mortgage portfolio totaling $571 billion and had
net outstanding guaranteed mortgage-backed securities of $701 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), and an exemption of its debt and mortgage securities from
Securities and Exchange Commission registration requirements. An
additional advantage is that the Secretary of the Treasury may purchase
and hold up to $2.25 billion of securities issued by Fannie Mae under
terms and conditions and at prices determined by the Secretary to be
appropriate. 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

[[Page 1239]]

geographically targeted goal is 24 percent and the special affordable
housing goal is 14 percent. These goals are also in effect for 2000.
Fannie Mae exceeded all of the housing goals in 1999 with low- and
moderate-income purchases at 45.9 percent, geographically targeted
purchases at 26.8 percent, and special affordable housing purchases at
17.6 percent.
In October 2000, HUD set new affordable housing goals for the period
covering 2001 to 2003. The goals are 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 30 percent to cover
management and operations risk. Total capital (shareholder's equity plus
allowance for loan losses) at the end of September 2000 was $20.5
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.
For the four quarters ending September 2000, Fannie Mae earned $4.3
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.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-2500-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1101 Fund balances..................... 5 20
Investments in US securities:

1102 Treasury securities, par........ 33 25
1104 Other........................... 36,498 55,130 57,714 63,386
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans (net of discount).. 477,130 538,255 635,655 734,714
1602 Federal Agencies................ 27,367 33,349 41,896 41,374
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -194 -199 -201 -204
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 504,303 571,405 677,351 775,884
1801 Cash and other monetary assets.... 10,513 11,345 12,316 13,885
1803 Property, plant and equipment, net 180 222
------------ -------------- ------------ -------------
1999 Total assets.................... 551,532 638,147 747,380 853,156
LIABILITIES:
2101 Accounts payable.................. 254 385
2102 Accrued interest payable.......... 6,575 7,509 10,177 11,787
2105 Other............................. 11 15
2203 Debt.............................. 524,880 607,039 711,031 812,430
2204 Estimated liability for loan
guarantees...................... 2,311 3,119 3,635 3,510
2206 Pension and other actuarial
liabilities..................... 288 362
2207 Subtotal, Federal taxes payable... 160 31
------------ -------------- ------------ -------------
2999 Total liabilities............... 534,477 618,460 724,843 827,726
NET POSITION:
Cumulative results of operations:

3300 Cumulative results of operations 17,674 20,769 24,311 28,323
3300 Change in Stockholder Equity.... -619 -1,083 -1,773 -2,893
------------ -------------- ------------ -------------
3999 Total net position.............. 17,055 19,687 22,538 25,429
------------ -------------- ------------ -------------
4999 Total liabilities and net position 551,532 638,147 747,380 853,156
-----------------------------------------------------------------------------------------------

mortgage-backed securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2501-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 160,105 232,349 237,019
--------- --------- ----------
1150 Total direct loan obligations..... 160,105 232,349 237,019
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 938,484 1,020,828 1,126,939
1231 Disbursements: Direct loan
disbursements................... 194,154 232,349 237,019
1251 Repayments: Repayments and
prepayments..................... -111,810 -126,237 -144,766
--------- --------- ----------
1290 Outstanding, end of year........ 1,020,828 1,126,939 1,219,193
---------------------------------------------------------------------------

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)

-----------------------------------------------------------------------------------------------
Identification code 99-2501-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
ASSETS:
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Direct loans, gross............. 939,092 1,021,437 1,127,548 1,219,798
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -608 -609 -609 -605
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 938,484 1,020,828 1,126,939 1,219,193
------------ -------------- ------------ -------------
1999 Total assets.................... 938,484 1,020,828 1,126,939 1,219,193
LIABILITIES:
2104 Resources payable................. 938,484 1,020,828 1,126,939 1,219,193
------------ -------------- ------------ -------------

[[Page 1240]]

2999 Total liabilities............... 938,484 1,020,828 1,126,939 1,219,193
-----------------------------------------------------------------------------------------------

FEDERAL HOME LOAN MORTGAGE CORPORATION

Portfolio Programs

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4420-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 81,090 95,778 100,750
--------- --------- ----------
1150 Total direct loan obligations..... 81,090 95,778 100,750
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 315,968 361,624 412,251
1231 Disbursements: Direct loan
disbursements................... 81,090 95,778 100,750
1251 Repayments: Repayments and
prepayments..................... -35,434 -45,151 -40,113
--------- --------- ----------
1290 Outstanding, end of year........ 361,624 412,251 472,888
---------------------------------------------------------------------------

The Federal Home Loan Mortgage Corporation (Freddie Mac), is a
federally-charted, shareholder-owned, private 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, 2000,
Freddie Mac held a net mortgage portfolio totaling $359 billion and had
net outstanding guaranteed mortgage-backed securities of $559 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), and an exemption for their debt and
mortgage securities from SEC filing registration requirements. An
additional advantage is that the Secretary of the Treasury may purchase
and hold up to $2.25 billion of securities issued by Freddie Mac under
terms and conditions and at prices determined by the Secretary to be
appropriate. 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 serves 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 and 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.
Additionally, within the special affordable goal was a multifamily
mortgage purchase target for Freddie Mac of $1.0 billion. In an October
2000 rule, HUD applied the 1996-1999 goals to 2000 and established new
goals for 2001-2003: 50 percent for the low- and moderate-income goal,
31 percent for the geographically targeted goal, 20 percent for the
special affordable housing goal and a multifamily target for Freddie Mac
of $2.1 billion.
Freddie Mac exceeded all of the housing goals in 1999 with low- and
moderate-income purchases of 46.1 percent, geographically targeted
purchases of 27.5 percent, special affordable purchases of 17.2 percent,
and the multifamily portion of the special affordable purchases of $2.3
billion in qualifying multifamily mortgages.
The Act also enhanced the regulatory oversight of Freddie Mac by
establishing the Office of Federal Housing Enterprise Oversight (OFHEO),
an independent office within HUD, headed by a Director appointed by the
President. OFHEO is responsible for ensuring that Freddie Mac is
adequately capitalized and operating in a safe and sound manner.
Included among the express statutory authorities of the Director is the
authority to conduct examinations of the financial health of the company
and to issue minimum and risk-based capital standards. The minimum
capital requirements are computed from statutorily established ratios
that are applied to the assets and off-balance sheet risks of Freddie
Mac. The risk-based capital standard determines the amount of capital
that Freddie Mac must hold to withstand the impact of simultaneous
adverse credit and interest rate stresses over a 10-year period, plus an
additional amount to cover management and operations risk. OFHEO intends
to issue a final rule in 2001 establishing the risk-based capital
standards.
For the four quarters ending September 2000, Freddie Mac recorded
net income of $2.5 billion.
The financial data contained in this material relating to future
periods represent estimates that have been prepared

[[Page 1241]]

specifically for inclusion in the President's budget. These data should
not be viewed as an official forecast of the corporation's future
position, nor should they be used as a basis for making financial or
investment decisions relating to the corporation. The data have been
developed on the basis of certain economic assumptions that are subject
to periodic review and revision. Consequently, the estimates are subject
to forecast error and actual results from future business operations are
likely to differ from these data.
According to generally accepted accounting principles utilized by
private corporations, the mortgages in the pools of loans supporting PCs
are considered to be owned by the holder of these securities. Therefore,
Freddie Mac does not show these mortgages as assets. However, the budget
philosophy of the United States Government includes these mortgages and
mortgages pass-through securities as assets and liabilities,
respectively, of Freddie Mac. For the purpose of this document,
therefore, they are presented as assets and liabilities in the
accompanying schedules. On the Status of Direct Loans schedule for
mortgage pass-through securities, the items labeled ``Disbursements''
and ``Repayments'' are budgetary terms. However, from Freddie Mac's
perspective, these amounts represent ``Sales of PCs'' and ``Amounts
passed through to PC holders,'' respectively.

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4420-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1201 Investments in other securities,
net............................. 26,515 48,593 54,693 56,070
1206 Receivables, net.................. 18,643 22,107 22,082 22,832
1207 Advances and prepayments.......... 487 945 1,838 1,838
Net value of assets related to
direct loans receivable and
acquired defaulted guaranteed
loans receivable:

1601 Retained mortgage inventory..... 315,968 361,624 412,251 472,888
1603 Allowances (-).................. -345 -334 -339 -360
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 315,623 361,290 411,912 472,528
1801 Cash and other monetary assets.... 1,992 224 252 259
1803 Property, plant and equipment, net 1,129 656 598 541
1901 Other assets...................... 496 -469 2,162 2,292
------------ -------------- ------------ -------------
1999 Total assets.................... 364,885 433,346 493,537 556,360
LIABILITIES:
2101 Accounts payable.................. 115 227 448 884
2201 Accounts payable.................. 2,146 1,823 1,448 1,011
2202 Interest payable.................. 2,311 2,988 6,331 6,844
2203 Debt.............................. 341,014 406,794 461,625 521,647
2206 Pension and other actuarial
liabilities..................... 19 26 36 49
Other:

2207 Accrued payroll and benefits.... 82 60 44 32
2207 Accrued annual leave (funded or
unfunded)..................... 2 2 2 2
2207 Other Liabilities............... 8,056 8,234 7,742 7,923
------------ -------------- ------------ -------------
2999 Total liabilities............... 353,745 420,154 477,676 538,392
NET POSITION:
3100 Invested capital.................. 11,140 13,192 15,861 17,968
------------ -------------- ------------ -------------
3999 Total net position.............. 11,140 13,192 15,861 17,968
------------ -------------- ------------ -------------
4999 Total liabilities and net position 364,885 433,346 493,537 556,360
-----------------------------------------------------------------------------------------------

Mortgage-Backed Securities

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4440-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 142,576 185,781 183,085
--------- --------- ----------
1150 Total direct loan obligations..... 142,576 185,781 183,085
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 529,213 559,242 611,015
1231 Disbursements: Direct loan
disbursements................... 142,576 185,781 183,085
1251 Repayments: Repayments and
prepayments..................... -112,547 -134,008 -107,029
--------- --------- ----------
1290 Outstanding, end of year........ 559,242 611,015 687,071
---------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4440-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
ASSETS:
1901 Underlying Mortgages.............. 529,231 559,242 611,015 687,071
------------ -------------- ------------ -------------
1999 Total assets.................... 529,231 559,242 611,015 687,071
LIABILITIES:
2104 Resources payable................. 529,213 559,242 611,015 687,071
------------ -------------- ------------ -------------
2999 Total liabilities............... 529,213 559,242 611,015 687,071
-----------------------------------------------------------------------------------------------

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)

----------------------------------------------------------------------------
Identification code 99-4130-0-3-351 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 48,122 50,000 50,000
--------- --------- ----------
1150 Total direct loan obligations..... 48,122 50,000 50,000
----------------------------------------------------------------------------

[[Page 1242]]

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 18,092 19,270 19,752
1231 Disbursements: Direct loan
disbursements................... 48,121 50,000 50,000
1251 Repayments: Repayments and
prepayments..................... -46,896 -49,502 -49,310
1263 Write-offs for default: Direct
loans........................... -47 -16 -16
--------- --------- ----------
1290 Outstanding, end of year........ 19,270 19,752 20,426
---------------------------------------------------------------------------

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4130-0-3-351 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 1,424 1,715 1,930 2,050
0102 Total interest expense............ -1,063 -1,323 -1,489 -1,581
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 361 392 441 469
0111 Other income...................... 46 39 44 46
0112 Other expense..................... -323 -257 -278 -287
------------ -------------- ------------ -------------
0115 Net income or loss (-)............ -277 -218 -234 -241
------------ -------------- ------------ -------------
0191 Total revenues.................... 1,470 1,754 1,974 2,096
------------ -------------- ------------ -------------
0192 Total expenses.................... -1,386 -1,580 -1,767 -1,868
------------ -------------- ------------ -------------
0195 Total income or loss (-).......... 84 174 207 228
------------ -------------- ------------ -------------
0199 Total comprehensive income........ 84 174 207 228
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1601 Direct loans, gross............. 18,092 19,270 19,752 20,426
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -314 -321 -329 -340
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 17,778 18,949 19,423 20,086
1803 Property, plant and equipment, net 159 167 176 179
------------ -------------- ------------ -------------
1999 Total assets.................... 21,874 23,637 24,233 25,058
LIABILITIES:
2104 Resources payable................. 167 301 184 170
Accounts payable:

2201 Consolidated systemwide and
other bank bonds.............. 19,468 20,971 21,495 22,229
2201 Notes payable and other
interest-bearing liabilities.. 351 302 310 320
2202 Accrued interest payable.......... 228 310 318 229
------------ -------------- ------------ -------------
2999 Total liabilities............... 20,214 21,884 22,307 22,948
NET POSITION:
3300 Cumulative results of operations.. 1,660 1,753 1,926 2,110
------------ -------------- ------------ -------------
3999 Total net position.............. 1,660 1,753 1,926 2,110
------------ -------------- ------------ -------------
4999 Total liabilities and net position 21,874 23,637 24,233 25,058
-----------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------
99-4130 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 1,697 1,660 1,753 1,926
============ ============== ============ =============

Capital stock and participations
issued.............................. 5 67 56
Capital stock and participations
retired............................. 80 53 60 60
Net income............................ 84 174 206 228
Cash/Dividends/Patronage Distributions -27 -36 -40 -40
Other, net............................ -19 8
------------ -------------- ------------ -------------
Ending balance of net worth............. 1,660 1,753 1,926 2,110
-----------------------------------------------------------------------------------------------

Financing Activities (in millions of dollars)

-----------------------------------------------------------------------------------------------
99-4130 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
Beginning balance of outstanding system
obligations......................... 18,079 19,468 20,971 21,495
============ ============== ============ =============

Consolidated systemwide and other bank
bonds issued........................ 11,875 6,155 6,500 6,500
Consolidated systemwide and other bank
bonds retired....................... 9,657 3,859 6,376 6,266
Consolidated systemwide notes, net.... -829 -793 400 500
------------ -------------- ------------ -------------
Ending balance of outstanding system
obligations......................... 19,468 20,971 21,495 22,229
-----------------------------------------------------------------------------------------------

Farm Credit Banks

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4160-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 47,553 45,173 46,477
--------- --------- ----------
1150 Total direct loan obligations..... 47,553 45,173 46,477
----------------------------------------------------------------------------

Cumulative balance of direct loans
outstanding:
1210 Outstanding, start of year........ 45,823 46,693 48,241
1231 Disbursements: Direct loan
disbursements................... 47,541 45,227 46,418
1251 Repayments: Repayments and
prepayments..................... -46,651 -43,682 -44,499
1264 Write-offs for default: Other
adjustments, net................ -20 3
--------- --------- ----------
1290 Outstanding, end of year........ 46,693 48,241 50,160
---------------------------------------------------------------------------
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, 2000 provided
funds to 58 Federal Land Credit Associations (FLCA), 53 Production
Credit Associations (PCAs), and 32 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, 2000,
3 Federal Land Bank Associations originated and serviced long-term real
estate loans for 1 of the 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.

[[Page 1243]]

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4160-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
0101 Total interest income............. 3,317 3,610 3,785 3,894
0102 Total interest expense............ -2,662 -3,037 -3,316 -3,439
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 655 573 469 455
0111 Other income...................... 59 61 31 31
0112 Other expenses.................... -325 -233 -180 -176
------------ -------------- ------------ -------------
0115 Net income or loss (-)............ -266 -172 -149 -145
------------ -------------- ------------ -------------
0191 Total revenues.................... 3,376 3,671 3,816 3,925
------------ -------------- ------------ -------------
0192 Total expenses.................... -2,987 -3,270 -3,496 -3,615
------------ -------------- ------------ -------------
0195 Total income or loss (-).......... 389 401 320 310
------------ -------------- ------------ -------------
0199 Total comprehensive income........ 389 401 320 310
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1601 Direct loans, gross............. 45,823 46,693 48,236 50,155
1603 Allowance for estimated
uncollectible loans and
interest (-).................. -358 -244 -239 -237
------------ -------------- ------------ -------------
1699 Value of assets related to
direct loans................ 45,465 46,449 47,997 49,918
1803 Property, plant and equipment, net 336 298 361 376
------------ -------------- ------------ -------------
1999 Total assets.................... 56,145 57,495 59,064 61,138
LIABILITIES:
2104 Resources payable................. 222 176 191 190
Accounts payable:

2201 Consolidated systemwide and
other bank bonds.............. 50,083 52,115 53,568 55,433
2201 Notes payable and other
interest-bearing liabilities.. 906 313 280 383
2202 Accrued interest payable.......... 511 514 533 551
------------ -------------- ------------ -------------
2999 Total liabilities............... 51,722 53,118 54,572 56,557
NET POSITION:
3300 Cumulative results of operations.. 4,423 4,377 4,492 4,580
------------ -------------- ------------ -------------
3999 Total net position.............. 4,423 4,377 4,492 4,580
------------ -------------- ------------ -------------
4999 Total liabilities and net position 56,145 57,495 59,064 61,137
-----------------------------------------------------------------------------------------------

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

-----------------------------------------------------------------------------------------------
99-4160 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth.......... 4,467 4,423 4,377 4,492
============ ============== ============ =============

Capital stock and participations
issued.............................. 68 153 50 48
Capital stock and participations
retired............................. 124 241 54 53
Surplus Retired.......................
Net income............................ 388 401 319 311
Cash/Dividends/Patronage Distributions -341 -267 -219 -218
Other, net............................ -35 -92 19
------------ -------------- ------------ -------------
Ending balance of net worth............. 4,423 4,377 4,492 4,580
-----------------------------------------------------------------------------------------------

Financing Activities (in millions of dollars)

--------------------------------------------------------------------
99-4160 1999 actual 2000 actual 2001 est. 2002 est.
--------------------------------------------------------------------
Beginning balance of outstanding system
obligations........................... 47,714 50,082 52,115 53,568
============== ============== ============= ==============

Consolidated systemwide and other bank
bonds issued........................ 43,114 29,025 31,344 32,013
Consolidated systemwide and other bank
bonds retired....................... 39,878 30,817 30,714 31,070
Consolidated systemwide notes, net.... -868 3,825 823 922
-------------- -------------- ------------- --------------

Ending balance of outstanding system
obligations........................... 50,082 52,115 53,568 55,433
-------------------------------------------------------------------------------------------------------

Federal Agricultural Mortgage Corporation (Farmer Mac)

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 United States
Department of Agriculture (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. As of September 30, 2000, Farmer Mac's
total capital exceeded statutory requirements.
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

[[Page 1244]]

or pools of qualified loans. These securities are not guaranteed by the
United States, and are not ``government 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. Comments were due June 12, 2000. After considering the
comments, the FCA Board adopted final risk-based capital rule and stress
test on February 21, 2001. 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.

Status of Guaranteed Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4180-0-3-351 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
2131 Guaranteed loan commitments....... 2,077 2,597 2,306
--------- --------- ----------
2150 Total guaranteed loan commitments. 2,077 2,597 2,306
----------------------------------------------------------------------------

Cumulative balance of guaranteed loans
outstanding:
2210 Outstanding, start of year........ 2,057 3,318 4,894
2231 Disbursements of new guaranteed
loans........................... 2,077 2,597 2,306
2251 Repayments and prepayments........ -816 -1,021 -1,200
--------- --------- ----------
2290 Outstanding, end of year........ 3,318 4,894 6,000
----------------------------------------------------------------------------

Memorandum:
2299 Guaranteed amount of guaranteed
loans outstanding, end of year.. 3,318 4,894 6,000
---------------------------------------------------------------------------

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4180-0-3-351 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
Revenue:
0101 Net Interest Income............... 14 18 22 25
0101 Guarantee Fee Income.............. 6 8 10 12
0101 Gain on Security Issuance.........
0102 Expense........................... -14 -18 -23 -27
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 6 8 9 10
------------ -------------- ------------ -------------
0199 Total comprehensive income........ 6 9 9 10
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1401 Direct loans receivable, gross.. 1,278 1,598 1,998 2,198
1402 Interest receivable............. 30 37 46 55
------------ -------------- ------------ -------------
1499 Net present value of assets
related to direct loans..... 1,308 1,635 2,044 2,253
1801 Cash and other monetary assets.... 506 476 89 100
------------ -------------- ------------ -------------
1999 Total assets.................... 2,682 2,982 3,008 3,228
LIABILITIES:
2201 Accounts payable.................. 4 4 6 7
2202 Interest payable.................. 12 15 18 21
2203 Debt.............................. 2,573 2,861 2,870 3,074
2204 Liabilities for loan guarantees... 6 7 9 11
------------ -------------- ------------ -------------
2999 Total liabilities............... 2,595 2,887 2,903 3,113
NET POSITION:
3300 Invested capital.................. 87 95 105 115
------------ -------------- ------------ -------------
3999 Total net position.............. 87 95 105 115
------------ -------------- ------------ -------------
4999 Total liabilities and net position 2,682 2,982 3,008 3,228
-----------------------------------------------------------------------------------------------

FEDERAL HOME LOAN BANK SYSTEM

Federal Home Loan Banks

Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4200-0-3-371 2000 actual 2001 est. 2002 est.
----------------------------------------------------------------------------
1131 Direct loan obligations........... 4,193,965 4,193,965 4,193,965
----------- ----------- ----------
1150 Total direct loan obligations..... 4,193,965 4,193,965 4,193,965
-------------------------------------------------------------------------
Cumulative balance of direct loans outstanding:
1210 Outstanding, start of year........ 366,842 444,505 446,727
1231 Disbursements: Direct loan
disbursements................... 4,193,965 4,193,965 4,193,965
1251 Repayments: Repayments and
prepayments..................... -4,116,302 -4,191,743 -4,191,743
----------- ----------- ----------
1290 Outstanding, end of year........ 444,505 446,727 448,949
----------------------------------------------------------------------------

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 7,220 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, 2000 totaled approximately
$420 billion, a net increase of approximately $65 billion from the
September 30, 1998 level of $365 billion.
The principal source of funds for the lending operation is the sale
of consolidated obligations to the public. On September 30, 2000, $577
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 $14 billion and total capital amounted to $31
billion as of September 30, 2000. 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

[[Page 1245]]

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, as amended in 1999,
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 2001 and 2002 contained in this material
represents estimates and should not be construed as an official forecast
of the FHLBanks System's future position.

Statement of Operations (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code 99-4200-0-3-371 1999 actual 2000 actual 2001 est. 2002 est.
-----------------------------------------------------------------------------------------------
0101 Revenue........................... 24,596 36,461 36,461 36,461
0102 Expense (excludes payments to
REFCORP)........................ -22,553 -34,239 -34,239 -34,239
------------ -------------- ------------ -------------
0105 Net income or loss (-)............ 2,043 2,222 2,222 2,222
-----------------------------------------------------------------------------------------------

Balance Sheet (in millions of dollars)

1102 Treasury securities, net........ 233 232 232 232
1201 Investments in other securities,
net............................. 155,471 177,913 177,913 177,913
1206 Accounts receivable............... 8,057 10,583 10,583 10,583
1401 Net value of assets related to
direct loans receivable: Direct
loans receivable, gross......... 366,842 444,505 446,727 448,949
1801 Cash and other monetary assets.... 399 410 410 410
1803 Property, plant and equipment, net 88 119 119 119
1901 Other assets...................... 261 204 204 204
------------ -------------- ------------ -------------
1999 Total assets.................... 531,351 633,966 636,188 638,410
LIABILITIES:
2101 REFCORP and Affordable Housing
Program......................... 580 737 737 737
2201 Accounts payable.................. 59 91 91 91
2202 Interest payable.................. 8,709 11,016 11,016 11,016
2203 Debt.............................. 477,472 577,057 577,057 577,057
Other:

2207 Deposit funds and other
borrowings.................... 16,147 869 869 869
2207 Other........................... 1,452 13,617 13,617 13,617
------------ -------------- ------------ -------------
2999 Total liabilities............... 504,419 603,387 603,387 603,387
NET POSITION:
3100 Invested capital.................. 26,932 30,579 32,801 35,023
------------ -------------- ------------ -------------
3999 Total net position.............. 26,932 30,579 32,801 35,023
------------ -------------- ------------ -------------
4999 Total liabilities and net position 531,351 633,966 636,188 638,410
-----------------------------------------------------------------------------------------------