Appendix - Estimates for Government-Sponsored Enterprises

[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)

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)

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)

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)

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)

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