[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
-----------------------------------------------------------------------------------------------
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