[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)

-----------------------------------------------------------------------------------------------
Identification code   99-1500-0-3-502    1999 actual    2000 actual     2001 est.      2002 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

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)

-----------------------------------------------------------------------------------------------
Identification code   99-4130-0-3-351    1999 actual    2000 actual     2001 est.      2002 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Cash and investment securities....       3,755          4,318         4,426          4,578
1206  Accrued interest receivable on 
        loans...........................         182            203           208            215
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

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)

-----------------------------------------------------------------------------------------------
Identification code   99-4160-0-3-371    1999 actual    2000 actual     2001 est.      2002 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Cash and investment securities....       9,590          9,978         9,926         10,036
1206  Accrued Interest Receivable.......         754            770           780            808
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

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)

-----------------------------------------------------------------------------------------------
Identification code   99-4180-0-3-351    1999 actual    2000 actual     2001 est.      2002 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
1201  Investment in securities..........         853            853           853            853
1206  Receivables, net..................           3              3             4              4
1207  Advances and prepayments..........          12             15            18             18
      Net value of assets related to 
          direct loans receivable:

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)

-----------------------------------------------------------------------------------------------
Identification code   99-4200-0-3-371    1999 actual    2000 actual     2001 est.      2002 est.
-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

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

                                
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