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

    [[Page 1205]]

                        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 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      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1111  Limitation on direct loans........
    1131  Direct loan obligations...........      12,088      13,097      15,250
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....      12,088      13,097      15,250
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      37,213      41,032      40,659
    1231  Disbursements: Direct loan
            disbursements...................      12,088      13,097      15,250
          Repayments:

    1251    Repayments and prepayments......      -3,499      -3,857      -4,268
    1252    Proceeds from loan asset sales
              or discounted.................      -4,942      -9,751     -14,750
    1264  Write-offs for default: Other
            adjustments, net................         172         138         124
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      41,032      40,659      37,015
    ---------------------------------------------------------------------------

        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]

                                         2001 actual  2002 est.   2003 est.
    Guaranteed student loans:
      Stafford:
        Purchased.......................       8,388      11,138      12,969
        Warehoused......................       1,113          --          --
      PLUS/SLS: Purchased...............         764         979       1,140
                                        ------------------------------------
          Subtotal, Guaranteed student
            loans.......................      10,265      12,117      14,109
    Other...............................       1,823         980       1,141
                                        ------------------------------------
          Total.........................      12,088      13,097      15,250
                                        ====================================

        Financing.--The GSE is financed by borrowing in the private debt
    markets and securitizing its assets. The GSE must wind down and be
    liquidated by September 30, 2008. All obligations of the GSE remaining
    upon liquidation must be placed into a defeasance trust. The GSE's
    outstanding adjustable rate cumulative preferred stock, which was
    required to

    [[Page 1206]]

    be redeemed prior to such date was redeemed on December 10, 2001.
        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    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................       3,647          2,952
    0102  Expense...........................      -3,160         -2,850
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............         487            102
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-1500-0-3-502    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1102    Treasury securities, par........       1,363          1,597         1,565          1,424
    1104    Agency securities, par..........
    1106    Receivables, net................       1,090          1,207         1,219          1,182
    1201  Investments in other securities,
            net.............................       2,393          4,829         2,327          1,109
    1206  Receivables, net..................         916          1,669         1,686          1,635
    1207  Advances and prepayments..........          21             11            12             12
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      37,317         41,185        40,811         37,153
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -104           -153          -152           -138
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      37,213         41,032        40,659         37,015
    1801  Cash and other monetary assets....         134             71            71             69
    1803  Property, plant and equipment, net
            *...............................         163
    1901  Other assets......................         407            310           313            304
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      43,700         50,726        47,852         42,750
        LIABILITIES:
    2202  Interest payable..................         417            332           326            293
    2203  Debt..............................      41,501         47,321        44,681         39,905
    2207  Other.............................         707          1,762         1,726          1,553
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      42,625         49,415        46,733         41,751
        NET POSITION:
    3300  Invested Capital..................       1,075          1,311         1,119            999
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       1,075          1,311         1,119            999
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      43,700         50,726        47,852         42,750
    -----------------------------------------------------------------------------------------------
        * In the first quarter of 2001, in accordance with the Privatization
    Act, the GSE transferred substantially all of its fixed assets and real
    estate to certain private non-GSE entities in USA education.

                      FEDERAL NATIONAL MORTGAGE ASSOCIATION

                               Portfolio Programs

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2500-0-3-371      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........     246,927     311,677     234,021
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....     246,927     311,677     234,021
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     587,600     700,484     818,161
          Disbursements:

    1231    Direct loan disbursements.......     235,339     301,883     233,494
    1232    Purchase of loans assets........       5,826         697         723
    1251  Repayments: Repayments and
            prepayments.....................    -127,259    -184,903    -108,991
    1264  Write-offs for default: Other
            adjustments, net................      -1,022
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     700,484     818,161     943,388
    ---------------------------------------------------------------------------

        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, 2001,
    Fannie Mae held a net mortgage portfolio totaling $687 billion and had
    net outstanding guaranteed mortgage-backed securities of $817 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

    [[Page 1207]]

    and minority concentration requirements. Under the regulations, the low-
    and moderate-income goal is 42 percent; the geographically targeted goal
    is 24 percent and the special affordable housing goal is 14 percent.
    These goals were also in effect for 2000. Fannie Mae exceeded all of the
    housing goals in 2000 with low- and moderate-income purchases at 49
    percent, geographically targeted purchases at 31 percent, and special
    affordable housing purchases at 19 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 2001 was $23.8
    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 2001, Fannie Mae earned $5.1
    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    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1101  Fund balances.....................          20            267
          Investments in US securities:

    1102    Treasury securities, par........          25          1,325
    1104    Other...........................      55,130         58,342        59,500         71,879
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans (net of discount)..     538,255        655,318       809,996        928,024
    1602    Federal Agencies................      33,349         31,684         6,187         13,678
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -199           -201          -200           -200
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................     571,405        686,801       815,983        941,502
    1801  Cash and other monetary assets....      11,345         19,686        17,452         19,307
    1803  Property, plant and equipment, net         222            229
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     638,147        766,650       892,934      1,032,688
        LIABILITIES:
    2101  Accounts payable..................         385            727
    2102  Accrued interest payable..........       7,509          8,628        10,655         12,532
    2105  Other.............................          15             17
    2203  Debt..............................     607,039        726,992       849,176        982,323
    2204  Estimated liability for loan
            guarantees......................       3,119         15,374        13,171         12,966
    2206  Pension and other actuarial
            liabilities.....................         362            402
    2207  Subtotal, Federal taxes payable...          31            730
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     618,460        752,871       873,002      1,007,821
        NET POSITION:
          Cumulative results of operations:

    3300    Cumulative results of operations      20,769         24,541        29,460         35,086
    3300    Change in Stockholder Equity....      -1,083        -10,763        -9,528        -10,220
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      19,687         13,778        19,932         24,866
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     638,147        766,650       892,934      1,032,688
    -----------------------------------------------------------------------------------------------

                             mortgage-backed securities

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-2501-0-3-371      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........     450,215     441,913     346,965
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....     450,215     441,913     346,965
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........   1,020,828   1,228,131   1,369,168
    1231  Disbursements: Direct loan
            disbursements...................     433,500     441,913     346,965
    1251  Repayments: Repayments and
            prepayments.....................    -226,197    -300,876    -207,091
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........   1,228,131   1,369,168   1,509,042
    ---------------------------------------------------------------------------

        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    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............   1,021,437      1,227,528     1,369,770      1,509,643
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -609           -603          -602           -601
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................   1,020,828      1,226,925     1,369,168      1,509,042
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................   1,020,828      1,226,925     1,369,168      1,509,042
        LIABILITIES:
    2104  Resources payable.................   1,020,828      1,228,131     1,369,168      1,509,042
                                            ------------ --------------  ------------  -------------

    [[Page 1208]]

    2999    Total liabilities...............   1,020,828      1,228,131     1,369,168      1,509,042
    -----------------------------------------------------------------------------------------------

                     FEDERAL HOME LOAN MORTGAGE CORPORATION

                               Portfolio Programs

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4420-0-3-371      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........     191,203     220,700     149,978
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....     191,203     220,700     149,978
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     361,624     470,850     542,220
    1231  Disbursements: Direct loan
            disbursements...................     191,203     220,700     149,978
    1251  Repayments: Repayments and
            prepayments.....................     -81,977    -149,330     -72,861
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     470,850     542,220     619,337
    ---------------------------------------------------------------------------

        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, 2001,
    Freddie Mac held a net mortgage portfolio totaling $471 billion and had
    net outstanding guaranteed mortgage-backed securities of $636 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 2000 with low- and
    moderate-income purchases of 50 percent, geographically targeted
    purchases of 29 percent, special affordable purchases of 21 percent, and
    the multifamily portion of the special affordable purchases of $2.4
    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
    published risk-based capital standards in September 2001 that become
    fully enforceable in September 2002.
        For the four quarters ending September 2001, Freddie Mac recorded
    net income of $3.4 billion.

    [[Page 1209]]

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

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4420-0-3-371    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1201  Investments in other securities,
            net.............................      48,593         65,964        74,324         72,104
    1206  Receivables, net..................      22,107         22,762        24,948         24,688
    1207  Advances and prepayments..........         945          2,170         2,507          2,769
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Retained mortgage inventory.....     359,638        475,213       541,876        619,053
    1603    Allowances (-)..................        -334           -327          -341           -349
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................     359,304        474,886       541,535        618,704
    1801  Cash and other monetary assets....         224            583           657            637
    1803  Property, plant and equipment, net         656            774           913          1,077
    1901  Other assets......................       1,517          4,768         3,026          3,267
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     433,346        571,907       647,910        723,246
        LIABILITIES:
    2101  Accounts payable..................         227            763           448            884
    2201  Accounts payable..................       1,823          1,457           970            523
    2202  Interest payable..................       2,988          4,452         7,141          9,065
    2203  Debt..............................     406,794        531,312       605,384        677,220
    2206  Pension and other actuarial
            liabilities.....................          26             75            82             89
          Other:

    2207    Accrued payroll and benefits....          60             35            38             42
    2207    Accrued annual leave (funded or
              unfunded).....................           2              2             2              2
    2207    Other Liabilities...............       8,234         19,305        14,058         13,800
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     420,154        557,401       628,123        701,625
        NET POSITION:
    3100  Invested capital..................      13,192         14,506        19,787         21,621
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      13,192         14,506        19,787         21,621
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     433,346        571,907       647,910        723,246
    -----------------------------------------------------------------------------------------------

                           Mortgage-Backed Securities

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4440-0-3-371      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........     212,151     280,188     158,895
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....     212,151     280,188     158,895
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........     559,242     635,844     674,631
    1231  Disbursements: Direct loan
            disbursements...................     212,151     280,188     158,895
    1251  Repayments: Repayments and
            prepayments.....................    -135,549    -241,401    -102,239
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........     635,844     674,631     731,287
    ---------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4440-0-3-371    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1901  Underlying Mortgages..............     559,242        635,844       674,631        731,287
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     559,242        635,844       674,631        731,287
        LIABILITIES:
    2104  Resources payable.................     559,242        635,844       674,631        731,287
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     559,242        635,844       674,631        731,287
    -----------------------------------------------------------------------------------------------

                               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 financed by assessments of system institutions. System
    banks finance loans 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

        CoBank, ACB is headquartered in Denver, Colorado and serves eligible
    cooperatives nationwide, and provides funding to Agricultural Credit
    Associations (ACAs) in one of its regions. CoBank, ACB is the only
    Agricultural Credit Bank in the Farm Credit System. 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      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........      63,879      50,000      50,000
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....      63,879      50,000      50,000
    ----------------------------------------------------------------------------

    [[Page 1210]]

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      19,270      19,588      20,333
    1231  Disbursements: Direct loan
            disbursements...................      63,763      50,000      50,000
    1251  Repayments: Repayments and
            prepayments.....................     -63,359     -49,215     -49,136
    1263  Write-offs for default: Direct
            loans...........................         -86         -41         -41
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      19,588      20,333      21,156
    ---------------------------------------------------------------------------

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4130-0-3-351    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    0101  Total interest income.............       1,715          1,689         1,769          1,851
    0102  Total interest expense............      -1,323         -1,223        -1,280         -1,340
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............         392            466           489            511
    0111  Other income......................          39             41            43             45
    0112  Other expense.....................        -257           -301          -306           -317
                                            ------------ --------------  ------------  -------------
    0115  Net income or loss (-)............        -218           -260          -263           -272
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................       1,754          1,730         1,812          1,896
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................      -1,580         -1,524        -1,586         -1,657
                                            ------------ --------------  ------------  -------------
    0195  Total income or loss (-)..........         174            206           226            239
                                            ------------ --------------  ------------  -------------
    0199  Total comprehensive income........         174            206           226            239
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4130-0-3-351    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1201  Cash and investment securities....       4,318          4,775         4,956          5,157
    1206  Accrued interest receivable on
            loans...........................         203            174           181            188
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      19,270         19,588        20,333         21,155
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -321           -324          -336           -350
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      18,949         19,264        19,997         20,805
    1803  Property, plant and equipment, net         167            450           443            480
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      23,637         24,663        25,577         26,630
        LIABILITIES:
    2104  Resources payable.................         301            363           375            395
          Accounts payable:

    2201    Consolidated systemwide and
              other bank bonds..............      20,971         21,275        22,083         22,977
    2201    Notes payable and other
              interest-bearing liabilities..         302            604           627            652
    2202  Accrued interest payable..........         310            222           231            240
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      21,884         22,464        23,316         24,264
        NET POSITION:
    3300  Cumulative results of operations..       1,753          2,199         2,260          2,366
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       1,753          2,199         2,260          2,366
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      23,637         24,663        25,576         26,630
    -----------------------------------------------------------------------------------------------

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

    -----------------------------------------------------------------------------------------------
                          99-4130            2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of net worth..........       1,660          1,753         2,199          2,260
                                            ============ ==============  ============  =============

      Capital stock and participations
        issued..............................                        300
      Capital stock and participations
        retired.............................         -53            -58           -73            -44
      Net income............................         174            207           226            240
      Cash/Dividends/Patronage Distributions         -36            -47           -80            -80
      Other, net............................           8             45           -12            -10
                                            ------------ --------------  ------------  -------------
    Ending balance of net worth.............       1,753          2,199         2,260          2,366
    -----------------------------------------------------------------------------------------------

                             Financing Activities (in millions of dollars)

    -----------------------------------------------------------------------------------------------
                          99-4130            2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of outstanding system
        obligations.........................      19,468         20,971        21,275         22,083
                                            ============ ==============  ============  =============

      Consolidated systemwide and other bank
        bonds issued........................       6,155          7,038         7,000          7,000
      Consolidated systemwide and other bank
        bonds retired.......................      -3,859         -6,897        -6,392         -6,306
      Consolidated systemwide notes, net....        -792            162           200            200
                                            ------------ --------------  ------------  -------------
    Ending balance of outstanding system
        obligations.........................      20,971         21,275        22,083         22,977
    -----------------------------------------------------------------------------------------------

                                Farm Credit Banks

                   Status of Direct Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4160-0-3-371      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........      73,564      64,728      58,775
                                               ---------   ---------  ----------
    1150  Total direct loan obligations.....      73,564      64,728      58,775
    ----------------------------------------------------------------------------

        Cumulative balance of direct loans
                    outstanding:
    1210  Outstanding, start of year........      46,693      52,445      55,011
    1231  Disbursements: Direct loan
            disbursements...................      73,483      64,676      58,735
    1251  Repayments: Repayments and
            prepayments.....................     -67,724     -62,110     -56,258
    1264  Write-offs for default: Other
            adjustments, net................          -7
                                               ---------   ---------  ----------
    1290    Outstanding, end of year........      52,445      55,011      57,488
    ---------------------------------------------------------------------------
        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, 2001 provided
    funds to 21 Federal Land Credit Associations (FLCA), 13 Production
    Credit Associations (PCAs), and 81 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. 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 1211]]

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4160-0-3-371    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    0101  Total interest income.............       3,610          3,631         3,220          3,471
    0102  Total interest expense............      -3,037         -3,076        -2,737         -3,005
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............         573            555           483            466
    0111  Other income......................          61             79            46             44
    0112  Other expenses....................        -233           -225          -210           -192
                                            ------------ --------------  ------------  -------------
    0115  Net income or loss (-)............        -172           -146          -164           -148
                                            ------------ --------------  ------------  -------------
    0191  Total revenues....................       3,671          3,710         3,266          3,515
                                            ------------ --------------  ------------  -------------
    0192  Total expenses....................      -3,270         -3,301        -2,947         -3,197
                                            ------------ --------------  ------------  -------------
    0195  Total income or loss (-)..........         401            409           319            318
                                            ------------ --------------  ------------  -------------
    0199  Total comprehensive income........         401            409           319            318
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4160-0-3-371    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1201  Cash and investment securities....       9,978         10,431        10,829         11,250
    1206  Accrued Interest Receivable.......         770            677           708            738
          Net value of assets related to
              direct loans receivable and
              acquired defaulted guaranteed
              loans receivable:

    1601    Direct loans, gross.............      46,693         52,446        55,451         58,363
    1603    Allowance for estimated
              uncollectible loans and
              interest (-)..................        -244           -252          -258           -260
                                            ------------ --------------  ------------  -------------
    1699      Value of assets related to
                direct loans................      46,449         52,194        55,193         58,103
    1803  Property, plant and equipment, net         298            396           348            343
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................      57,495         63,698        67,078         70,434
        LIABILITIES:
    2104  Resources payable.................         176            443           459            457
          Accounts payable:

    2201    Consolidated systemwide and
              other bank bonds..............      52,115         58,010        61,242         64,410
    2201    Notes payable and other
              interest-bearing liabilities..         313            360           365            421
    2202  Accrued interest payable..........         514            447           452            475
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............      53,118         59,260        62,518         65,763
        NET POSITION:
    3300  Cumulative results of operations..       4,377          4,437         4,559          4,671
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............       4,377          4,437         4,559          4,671
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position      57,495         63,697        67,077         70,434
    -----------------------------------------------------------------------------------------------

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

    -----------------------------------------------------------------------------------------------
                          99-4160            2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    Beginning balance of net worth..........       4,423          4,377         4.437          4,559
                                            ============ ==============  ============  =============

      Capital stock and participations
        issued..............................         153             93           106             85
      Capital stock and participations
        retired.............................        -241           -142           -81            -71
      Surplus Retired.......................                         -9
      Net income............................         401            409           320            317
      Cash/Dividends/Patronage Distributions        -268           -289          -218           -218
      Other, net............................         -92             -1            -5             -1
                                            ------------ --------------  ------------  -------------
    Ending balance of net worth.............       4,377          4,437         4,559          4,671
    -----------------------------------------------------------------------------------------------

                  Financing Activities (in millions of dollars)

        --------------------------------------------------------------------
                        99-4160                 2000 actual     2001 actual      2002 est.      2003 est.
        --------------------------------------------------------------------
    Beginning balance of outstanding system
      obligations...........................           50,082          52,115         58,010          61,245
                                               ==============  ==============  =============  ==============

      Consolidated systemwide and other bank
        bonds issued........................           29,024          38,723         39,252          39,706
      Consolidated systemwide and other bank
        bonds retired.......................          -30,817         -34,342        -36,735         -36,839
      Consolidated systemwide notes, net....            3,825           1,514            718             306
                                               --------------  --------------  -------------  --------------

    Ending balance of outstanding system
      obligations...........................           52,115          58,010         61,245          64,418
    -------------------------------------------------------------------------------------------------------

                    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 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.
        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.
        As of September 30, 2001, Farmer Mac's total capital exceeded
    statutory requirements. In May of 2001 FCA published a final rule for
    risk based regulatory capital that allows for a one-year grace period
    before implementation. Therefore, as of May 2002, Farmer Mac must
    maintain risk-based regulatory capital as provided in FCA regulations.
        Available funds of Farmer Mac are invested in U.S. agency securities
    or other high-grade commercial investments. No stock dividends are
    allowed under the Act until the Board determines that an adequate loss
    reserve has been funded to back Farmer Mac guarantees.

    [[Page 1212]]

                                   Guarantees

        Farmer Mac provides a guarantee of timely payment of principal and
    interest on securities backed by qualified loans or pools of qualified
    loans. These securities are not guaranteed by the United States, and are
    not ``government securities''.
        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 the supervision,
    examination of and rulemaking for Farmer Mac.

                 Status of Guaranteed Loans (in millions of dollars)

    ----------------------------------------------------------------------------
    Identification code 99-4180-0-3-351      2001 actual   2002 est.   2003 est.
    ----------------------------------------------------------------------------
    2131  Guaranteed loan commitments.......       2,597       2,306       1,000
                                               ---------   ---------  ----------
    2150  Total guaranteed loan commitments.       2,597       2,306       1,000
    ----------------------------------------------------------------------------

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

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

                            Statement of Operations (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4180-0-3-351    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        Revenue:
    0101  Net Interest Income...............          18             22            25             25
    0101  Guarantee Fee Income..............           8             10            12             12
    0101  Gain on Security Issuance.........
    0102  Expense...........................         -18            -23           -27            -27
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............           8              9            10             10
                                            ------------ --------------  ------------  -------------
    0199  Total comprehensive income........           8              9            10             10
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4180-0-3-351    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
    1201  Investment in securities..........         853            853           853            853
    1206  Receivables, net..................           3              4             4              4
    1207  Advances and prepayments..........          15             18            18             18
          Net value of assets related to
              direct loans receivable:

    1401    Direct loans receivable, gross..       1,598          1,998         2,198          2,198
    1402    Interest receivable.............          37             46            55             55
                                            ------------ --------------  ------------  -------------
    1499      Net present value of assets
                related to direct loans.....       1,635          2,044         2,253          2,253
    1801  Cash and other monetary assets....         476             89           100            100
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................       2,982          3,008         3,228          3,228
        LIABILITIES:
    2201  Accounts payable..................           4              6             7              7
    2202  Interest payable..................          15             18            21             21
    2203  Debt..............................       2,861          2,870         3,074          3,064
    2204  Liabilities for loan guarantees...           7              9            11             11
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............       2,887          2,903         3,113          3,103
        NET POSITION:
    3300  Invested capital..................          95            105           115            125
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............          95            105           115            125
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position       2,982          3,008         3,228          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    2001 actual    2002 est.   2003 est.
    ----------------------------------------------------------------------------
    1131  Direct loan obligations...........  4,144,928    4,144,928   4,144,928
                                            -----------  -----------  ----------
    1150  Total direct loan obligations.....  4,144,928    4,144,928   4,144,928
      -------------------------------------------------------------------------
        Cumulative balance of direct loans outstanding:
    1210  Outstanding, start of year........    444,505      489,413     489,413
    1231  Disbursements: Direct loan
            disbursements...................  4,144,928    4,144,928   4,144,928
    1251  Repayments: Repayments and
            prepayments..................... -4,100,020   -4,144,928  -4,144,928
                                            -----------  -----------  ----------
    1290    Outstanding, end of year........    489,413      489,413     489,413
    ----------------------------------------------------------------------------

        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 7,897 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
    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, 2001 totaled approximately
    $467 billion, a net increase of approximately $37 billion from the
    September 30, 2000 level of $430 billion.
        The principal source of funds for the lending operation is the sale
    of consolidated obligations to the public. On September 30, 2001, $611
    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 $29 billion and total capital amounted to $33
    billion as of September 30, 2001. Funds not immediately needed for
    advances to members are invested.
        The capital stock of the Federal Home Loan Banks is owned entirely
    by the members. Initially the U.S. Government purchased stock of the
    banks in the amount of $125 million. The banks had repurchased the
    Government's investment in full by mid-1951.
        The operating expenses of the FHLBanks are paid from their own
    income and are not included in the budget of the United States. Included
    in these expenses are the assessments by the Finance Board to cover its
    administrative and other costs. The Finance Board's budget and
    expenditures, however, are included in the budget of the United States.
        The Act, as amended in 1989, requires each FHLBank to operate an
    Affordable Housing Program (AHP). Each FHLBank provides subsidies in the
    form of direct grants or below-market rate advances for members that use
    the funds for qualifying affordable housing projects. The FHLBank System
    sets aside for its AHPs the greater of $100 million annually or 10
    percent of net income. The Act, as amended in 1999, also requires that
    the FHLBanks contribute 20 percent

    [[Page 1213]]

    of net earnings annually to assist in the payment of interest on bonds
    issued by the Resolution Funding Corporation.
        The forecast data for 2002 and 2003 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    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
    0101  Revenue...........................      36,461         36,404        36,404         36,404
    0102  Expense (includes payments to
            REFCORP)........................     -34,239        -34,312       -34,282        -34,282
                                            ------------ --------------  ------------  -------------
    0105  Net income or loss (-)............       2,222          2,092         2,122          2,122
    -----------------------------------------------------------------------------------------------

                                 Balance Sheet (in millions of dollars)

    -----------------------------------------------------------------------------------------------
    Identification code   99-4200-0-3-371    2000 actual    2001 actual     2002 est.      2003 est.
    -----------------------------------------------------------------------------------------------
        ASSETS:
          Investments in US securities:

    1102    Treasury securities, net........         232            206           206            206
    1201  Investments in other securities,
            net.............................     177,913        193,470       193,470        193,470
    1206  Accounts receivable...............      10,583          3,248         3,248          3,248
    1401  Net value of assets related to
            direct loans receivable: Direct
            loans receivable, gross.........     444,505        489,413       489,413        489,413
    1801  Cash and other monetary assets....         410          1,013         1,013          1,013
    1803  Property, plant and equipment, net         119            126           126            126
    1901  Other assets......................         204          3,712         3,712          3,712
                                            ------------ --------------  ------------  -------------
    1999    Total assets....................     633,966        691,188       691,188        691,188
        LIABILITIES:
    2101  REFCORP and Affordable Housing
            Program.........................         737            778           778            778
    2201  Accounts payable..................          91
    2202  Interest payable..................      11,016          5,538         5,538          5,538
    2203  Debt..............................     577,057        611,338       611,338        611,338
          Other:

    2207    Deposit funds and other
              borrowings....................         869         10,839        10,839         10,839
    2207    Other...........................      13,617         29,571        29,571         29,571
                                            ------------ --------------  ------------  -------------
    2999    Total liabilities...............     603,387        658,064       658,064        658,064
        NET POSITION:
    3100  Invested capital..................      30,579         33,124        33,124         33,124
                                            ------------ --------------  ------------  -------------
    3999    Total net position..............      30,579         33,124        33,124         33,124
                                            ------------ --------------  ------------  -------------
    4999  Total liabilities and net position     633,966        691,188       691,188        691,188
    -----------------------------------------------------------------------------------------------