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



[[Page 1245]]


 
                    GOVERNMENT-SPONSORED ENTERPRISES

    This chapter contains descriptions of the 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, and their securities are not backed by the full faith and 
credit of the Federal Government. However, because of their public 
purpose, detailed statements of financial 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 (Sallie Mae) is a for-
        profit financial corporation chartered by the 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.

    --The Federal Home Loan Banks assist thrift institutions, banks, 
        insurance companies, and credit unions in providing financing 
        for housing and community development.

    --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.

                                


 
                   STUDENT LOAN MARKETING ASSOCIATION

                   Student Loan Marketing Association

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-1500-0-3-502      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........      10,219
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      10,219
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      27,923
1231  Disbursements: Direct loan 
        disbursements...................      10,219
      Repayments:

1251    Repayments and prepayments......      -3,173
1252    Proceeds from loan asset sales 
          or discounted.................     -34,833
                                           ---------   ---------  ----------
1290    Outstanding, end of year........         136
---------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

    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. 
Sallie Mae was reorganized in 1997 pursuant to the authority granted by 
the Student Loan Marketing Association Reorganization Act of 1996. Under 
the Reorganization Act, the GSE became a wholly owned subsidiary of SLM 
Corporation and was required to be wound down and liquidated by January 
30, 2008. On June 30, 2004, SLM Corporation first purchased FFELP 
student loans through non-GSE affiliates and, as a result, the GSE was 
required by statute to terminate purchases of FFELP student loans. 
Accordingly, the GSE is no longer a source of liquidity for SLM 
Corporation for the purchase of student loans and the GSE-related 
financing activities have primarily consisted of refinancing the 
remainder of its assets through non-GSE sources. As of September 2004, 
SLM Corporation had substantially completed the wind down of the GSE 
and, on November 1, 2004, it sent notices to the Secretary of Education 
and the Secretary of the Treasury that it intended to wind down and 
dissolve the GSE on December 31, 2004, three years in advance of the 
statutory deadline. The dissolution was completed on December 29, 2004. 
All GSE debt that remains outstanding upon completion of these wind down 
activities will be defeased through the creation of a fully 
collateralized trust, consisting of cash and financial instruments 
backed by the full faith and credit of the U.S. Government with cash 
flows that provide for the interest and principal obligations of the 
defeased debt.
    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]
                                                      2004 actual
Guaranteed student loans:
 Stafford:

  Purchased.......................................               7,152
  Warehoused......................................                  65
 PLUS/SLS: Purchased..............................               1,238
                                                  --------------------

   Subtotal, Guaranteed student loans.............               8,455
Health processing loans: Purchased................                   0
Other.............................................               1,764
                                                  --------------------

   Total..........................................              10,219
                                                  ====================

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-1500-0-3-502

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102

Treasury securities, par

1,731

534

1106

Receivables, net

429

13

1201

Investments in other securities, net

1,408

4,001

1206

Receivables, net

29

6

1207

Advances and prepayments

9



      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans, gross

27,971

136

1603

Allowance for estimated uncollectible loans and interest (-)

-48







1699

Value of assets related to direct loans

27,923

136

1801

Cash and other monetary assets

12

3

1901

Other assets

224

2





1999

Total assets

31,765

4,695

    LIABILITIES:
2202

Interest payable

265

54

[[Page 1246]]

2203

Debt

26,821

2,058

2207

Other

2,331

834





2999

Total liabilities

29,417

2,946

    NET POSITION:
3300

Invested Capital

2,348

1,749





3999

Total net position

2,348

1,749





4999

Total liabilities and net position

31,765

4,695

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

                                


 
                  FEDERAL NATIONAL MORTGAGE ASSOCIATION

                           Portfolio Programs

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2500-0-3-371      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........
      Disbursements:

1231    Direct loan disbursements.......
1232    Purchase of loans assets........
1251  Repayments: Repayments and 
        prepayments.....................
1264  Write-offs for default: Other 
        adjustments, net................
                                           ---------   ---------  ----------
1290    Outstanding, end of year........
---------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

    The Federal National Mortgage Association (Fannie Mae) is a 
Government-sponsored enterprise (GSE) in the housing finance market. On 
September 10, 2003 and October 16, 2003, the Secretaries of the 
Departments of Housing and Urban Development and the Treasury announced 
a proposal to strengthen regulation of all the housing GSEs, including 
Fannie Mae.
    As a housing GSE, 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.
    Through a Federal charter, the 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 and debt issued by Fannie Mae 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. The 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, the 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 (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.''

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-2500-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
1101

Fund balances





      Investments in US securities:

1102

Treasury securities, par





1104

Other





      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans (net of discount)





1602

Federal Agencies





1603

Allowance for estimated uncollectible loans and interest (-)









1699

Value of assets related to direct loans





1801

Cash and other monetary assets





1803

Property, plant and equipment, net









1999

Total assets





    LIABILITIES:
2101

Accounts payable





2102

Accrued interest payable





2105

Other





2203

Debt





2204

Estimated liability for loan guarantees





2206

Pension and other actuarial liabilities





2207

Subtotal, Federal taxes payable









2999

Total liabilities





    NET POSITION:
3300

Cumulative results of operations





3300

Change in Stockholder Equity









3999

Total net position









4999

Total liabilities and net position





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

                                

                         mortgage-backed securities

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-2501-0-3-371      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........

[[Page 1247]]

1231  Disbursements: Direct loan 
        disbursements...................
1251  Repayments: Repayments and 
        prepayments.....................
                                           ---------   ---------  ----------
1290    Outstanding, end of year........
---------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

    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 Fannie Mae's perspective, these items are ``Amounts issued'' and 
``Amounts passed through to the holders of securities'', respectively. 
Financial data for Fannie Mae is not presented here because Fannie Mae 
announced in December 2004 that it would have to restate financial 
results for 2001-2004.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-2501-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans, gross





1603

Allowance for estimated uncollectible loans and interest (-)









1699

Value of assets related to direct loans









1999

Total assets





    LIABILITIES:
2104

Resources payable









2999

Total liabilities









4999

Total liabilities and net position





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

                                


 
                 FEDERAL HOME LOAN MORTGAGE CORPORATION

                           Portfolio Programs

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4420-0-3-371      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1131  Direct loan obligations...........
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........
1231  Disbursements: Direct loan 
        disbursements...................
1251  Repayments: Repayments and 
        prepayments.....................
                                           ---------   ---------  ----------
1290    Outstanding, end of year........
---------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

    The Federal Home Loan Mortgage Corporation (Freddie Mac) is a 
Government-sponsored enterprise (GSE) in the housing finance market. On 
September 10, 2003 and October 16, 2003, the Secretaries of the 
Departments of Housing and Urban Development and the Treasury announced 
a proposal to strengthen regulation of all the housing GSEs, including 
Freddie Mac.
    As a housing GSE, 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.
    Through a Federal charter, the 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 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 Freddie Mac under terms and conditions and at prices determined by 
the Secretary to be appropriate. Securities guaranteed and debt issued 
by Freddie Mac are explicitly not backed by the full faith and credit of 
the U.S. Government. The common stock of the corporation is owned by 
private shareholders 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. The 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.
    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. In addition, FIRREA converted 
Freddie Mac's 60 million shares of non-voting, senior participating 
preferred stock into voting common stock.
    While financial data for 2003 is presented here, Freddie Mac 
announced on November 1, 2004 that it would not report full-year audited 
2004 results until March 31, 2005.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4420-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102

Treasury securities, par





1201

Investments in other securities, net

116,837



1206

Receivables, net

9,987



      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans, gross

661,157



1603

Allowance for estimated uncollectible loans and interest (-)

-183







1699

Value of assets related to direct loans

660,974



1801

Cash and other monetary assets

27,740



1803

Property, plant and equipment, net

569



1901

Other assets

20,606







1999

Total assets

836,713



    LIABILITIES:
2101

Accounts payable

6



2202

Interest payable

5,352



2203

Debt

757,004



2207

Other

42,207







2999

Total liabilities

804,569



[[Page 1248]]

    NET POSITION:
3100

Appropriated capital

32,144







3999

Total net position

32,144







4999

Total liabilities and net position

836,713



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

                                

                       Mortgage-Backed Securities

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4440-0-3-371      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........
1231  Disbursements: Direct loan 
        disbursements...................
1251  Repayments: Repayments and 
        prepayments.....................
                                           ---------   ---------  ----------
1290    Outstanding, end of year........
---------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4440-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
1901

Underlying Mortgages









1999

Total assets





    LIABILITIES:
2104

Resources payable









2999

Total liabilities





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

                                


 
                      FEDERAL HOME LOAN BANK SYSTEM

                         Federal Home Loan Banks

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code  99-4200-0-3-371    2004 actual    2005 est.   2006 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........
                                        -----------  -----------  ----------
1150  Total direct loan obligations.....
  -------------------------------------------------------------------------
    Cumulative balance of direct loans outstanding:
1210  Outstanding, start of year........
1231  Disbursements: Direct loan 
        disbursements...................
1251  Repayments: Repayments and 
        prepayments.....................
1264  Write-offs for default: Other 
        adjustments, net................
                                        -----------  -----------  ----------
1290    Outstanding, end of year........
----------------------------------------------------------------------------
    Note: Consistent with Government-wide practice for GSEs, information for 
2005 and 2006 was not required to be collected.

    The Federal Home Loan Bank System is a Government-sponsored 
enterprise (GSE) in the housing finance market. On September 10, 2003 
and October 16, 2003, the Secretaries of the Departments of Housing and 
Urban Development and the Treasury announced a proposal to strengthen 
regulation of all the housing GSEs, including the Federal Home Loan Bank 
System.

    The 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 
(Act). The 12 Federal Home Loan Banks (FHLBanks) are under the 
supervision of the Federal Housing Finance Board (FHFB). The common 
mission of FHLBanks is to facilitate the extension of credit through 
their members. To accomplish this mission, FHLBanks make loans, called 
advances, and provide other credit products and services to their 8,122 
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 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.

    The principal source of funds for the lending operation is the sale 
of consolidated obligations to the public. 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. 
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 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. 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 
FHLBanks contribute 20 percent of net earnings annually to assist in the 
payment of interest on bonds issued by the Resolution Funding 
Corporation.

    In 2002, the Administration requested all GSEs, including FHLBanks, 
to voluntarily register their equity securities with the Securities and 
Exchange Commission (SEC). This voluntary registration is part of the 
Administration's efforts to have GSEs undergo the same scrutiny process 
as other corporate enterprises. While FHLBanks have still not registered 
with SEC, FHFB adopted a rule on June 23, 2004 that will require each 
FHLBank to register a class of its stock by June 30, 2005. (Freddie Mac 
similarly has failed to commence registration with SEC, in spite of its 
prior commitment to do so. Fannie Mae registered with the SEC effective 
March 31, 2003.)

    Financial data for the Federal Home Loan Banks (FHLBs) is not 
presented here because the FHLBs announced through their Office of 
Finance in December 2004 that the consolidated financial statements for 
the FHLBs for 2002 and 2003, and the first two quarters of 2004 will 
need to be restated.

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4200-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
      Investments in US securities:

1102

Treasury securities, net





1201

Investments in other securities, net





1206

Accounts receivable





1401

Net value of assets related to direct loans receivable: Direct loans 
receivable, gross





1801

Cash and other monetary assets





[[Page 1249]]

1803

Property, plant and equipment, net





1901

Other assets









1999

Total assets





    LIABILITIES:
2101

REFCORP and Affordable Housing Program





2202

Interest payable





2203

Debt





2207

Deposit funds and other borrowings





2207

Other









2999

Total liabilities





    NET POSITION:
3100

Invested capital









3999

Total net position









4999

Total liabilities and net position





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

                                


 
                           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 and the 
Federal Agricultural Mortgage Corporation. 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.

                                

                        Agricultural Credit Bank

    CoBank, ACB is headquartered in Denver, Colorado and serves eligible 
cooperatives nationwide, and provides funding to Agricultural Credit 
Associations (ACAs) in two of its regions. CoBank, ACB is the only 
Agricultural Credit Bank (ACB) in the Farm Credit System. An ACB 
operates under statutory authority that combines the authorities of a 
Farm Credit Bank (FCB) and a Bank for Cooperatives (BC). In exercising 
its FCB authority, CoBank, ACB's charter limits its lending to ACAs 
located in the northeast and northwest regions of the country. 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      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........      70,969      71,000      72,000
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      70,969      71,000      72,000
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      23,463      23,270      24,433
1231  Disbursements: Direct loan 
        disbursements...................      70,928      71,000      72,000
1251  Repayments: Repayments and 
        prepayments.....................     -71,071     -69,794     -69,638
1263  Write-offs for default: Direct 
        loans...........................         -50         -43         -35
                                           ---------   ---------  ----------
1290    Outstanding, end of year........      23,270      24,433      26,760
---------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4130-0-3-351

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
1201

Cash and investment securities

5,916

6,877

1206

Accrued interest receivable on loans

112

117

      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans, gross

23,463

23,269

1603

Allowance for estimated uncollectible loans and interest (-)

-435

-431





1699

Value of assets related to direct loans

23,028

22,838

1803

Property, plant and equipment, net

428

196





1999

Total assets

29,484

30,028

    LIABILITIES:
2104

Resources payable

309

388

2201

Consolidated systemwide and other bank bonds

25,448

26,040

2201

Notes payable and other interest-bearing liabilities

1,003

586

2202

Accrued interest payable

132

144





2999

Total liabilities

26,892

27,158

    NET POSITION:
3300

Cumulative results of operations

2,592

2,870





3999

Total net position

2,592

2,870





4999

Total liabilities and net position

29,484

30,028

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

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

-----------------------------------------------------------------------------------------------
                      99-4130            2003 actual    2004 actual     2005 est.      2006 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth..........   2,286,988      2,591,868     2,869,656      2,927,970
                                        ============ ==============  ============  =============

  Capital stock and participations 
    issued..............................     229,149        200,063            98            149
  Capital stock and participations 
    retired.............................     102,255         76,829       101,182        106,400
  Net income............................     256,453        277,865       282,197        287,881
  Cash/Dividends/Patronage Distributions     -92,275       -105,608      -122,799       -125,000
  Other, net............................      13,808        -17,703
                                        ------------ --------------  ------------  -------------
Ending balance of net worth.............   2,591,868      2,869,656     2,927,970      2,984,600
-----------------------------------------------------------------------------------------------

             Financing Activities (in thousands of dollars)

    --------------------------------------------------------------------
                    99-4130                 2003 actual     2004 actual      2005 est.      2006 est.
    --------------------------------------------------------------------
Beginning balance of outstanding system 
  obligations...........................       22,512,882      25,448,279     26,040,303      27,342,318
                                           ==============  ==============  =============  ==============

  Consolidated systemwide and other bank 
    bonds issued........................       13,957,965       8,010,499      8,500,000      10,000,000
  Consolidated systemwide and other bank 
    bonds retired.......................        8,973,747       6,707,741      7,297,985       7,495,970
  Consolidated systemwide notes, net....       -1,756,495        -597,642        100,000         100,000
  Other (Net)...........................         -292,326        -113,092
                                           --------------  --------------  -------------  --------------

Ending balance of outstanding system 
  obligations...........................       25,448,279      26,040,303     27,342,318      29,946,348
-------------------------------------------------------------------------------------------------------

                                

                            Farm Credit Banks

               Status of Direct Loans (in millions of dollars)

----------------------------------------------------------------------------
Identification code 99-4160-0-3-371      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
1111  Limitation on direct loans........
1131  Direct loan obligations...........      79,858      75,715      78,775
                                           ---------   ---------  ----------
1150  Total direct loan obligations.....      79,858      75,715      78,775
----------------------------------------------------------------------------

    Cumulative balance of direct loans 
                outstanding:
1210  Outstanding, start of year........      58,353      60,762      63,747
1231  Disbursements: Direct loan 
        disbursements...................      79,846      79,433      82,700
1251  Repayments: Repayments and 
        prepayments.....................     -77,431     -76,448     -79,651

[[Page 1250]]

1264  Write-offs for default: Other 
        adjustments, net................          -6
                                           ---------   ---------  ----------
1290    Outstanding, end of year........      60,762      63,747      66,796
---------------------------------------------------------------------------
    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. 
FCBs operate under statutory authority that combines the prior 
authorities of FLB and FICB. No merger occurred in the Jackson district 
in 1988 because 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, FICB of Jackson merged with FCB of Columbia on October 1, 
1993. Mergers and consolidations of FCBs across district lines that 
began in 1992 have continued to date. As a result of this restructuring 
activity, 4 FCBs, headquartered in the following cities, remain: AgFirst 
FCB, Columbia, South Carolina; AgriBank FCB, St. Paul, Minnesota; U.S. 
Ag Bank, FCB, Wichita, Kansas; and FCB of Texas, Austin, Texas.
    FCBs serve as discount banks and as of October 1, 2004 provided 
funds to 11 Federal Land Credit Associations (FLCA) and 81 Agricultural 
Credit Associations (ACAs). These direct lender associations, in turn, 
make short-term production loans and long-term real estate loans 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 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 FLB's was repaid in 1947. 

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4160-0-3-371

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
1201

Cash and investment securities

13,931

15,576

1206

Accrued Interest Receivable

382

418

      Net value of assets related to 
          direct loans receivable and 
          acquired defaulted guaranteed 
          loans receivable:

1601

Direct loans, gross

58,353

60,762

1603

Allowance for estimated uncollectible loans and interest (-)

-151

-130





1699

Value of assets related to direct loans

58,202

60,632

1803

Property, plant and equipment, net

408

329





1999

Total assets

72,923

76,955

    LIABILITIES:
2104

Resources payable

335

235

2201

Consolidated systemwide and other bank bonds

67,640

71,078

2201

Notes payable and other interest-bearing liabilities

409

734

2202

Accrued interest payable

355

388





2999

Total liabilities

68,739

72,435

    NET POSITION:
3300

Cumulative results of operations

4,184

4,520





3999

Total net position

4,184

4,520





4999

Total liabilities and net position

72,923

76,955

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

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

-----------------------------------------------------------------------------------------------
                      99-4160            2003 actual    2004 actual     2005 est.      2006 est.
-----------------------------------------------------------------------------------------------
Beginning balance of net worth..........   3,750,211      4,183,851     4,520,633      4,776,205
                                        ============ ==============  ============  =============

  Capital stock and participations 
    issued..............................     517,671        431,832        30,193         31,313
  Capital stock and participations 
    retired.............................     186,310        169,946           123
  Surplus Retired.......................         963           -276
  Net income............................     351,895        389,137       416,099        441,115
  Cash/Dividends/Patronage Distributions    -353,902       -313,854      -230,290       -250,512
  Other, net............................     105,249           -663        39,693          5,735
                                        ------------ --------------  ------------  -------------
Ending balance of net worth.............   4,183,851      4,520,633     4,776,205      5,003,856
-----------------------------------------------------------------------------------------------

             Financing Activities (in thousands of dollars)

    --------------------------------------------------------------------
                    99-4160                 2003 actual     2004 actual      2005 est.      2006 est.
    --------------------------------------------------------------------
Beginning balance of outstanding system 
  obligations...........................       53,785,021      67,415,911     71,047,982      75,137,321
                                           ==============  ==============  =============  ==============

  Consolidated systemwide and other bank 
    bonds issued........................       55,508,867      32,343,885     42,086,804      46,658,492
  Consolidated systemwide and other bank 
    bonds retired.......................       37,369,535      29,918,782     38,422,430      44,159,009
  Consolidated systemwide notes, net....       -4,283,442         985,180        424,965         324,000
                                           --------------  --------------  -------------  --------------

Ending balance of outstanding system 
  obligations...........................       67,415,911      71,077,982     75,137,321      77,960,804
-------------------------------------------------------------------------------------------------------

                                

                Federal Agricultural Mortgage Corporation

                              (Farmer Mac)

    Farmer Mac is authorized under the Farm Credit Act of 1971 (Act), as 
amended by the Agricultural Credit Act of 1987, to create a secondary 
market for agricultural real estate and rural home mortgages. 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, 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 (1996 Act) 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 
poolers 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 core capital requirements at Farmer Mac phased in 
over three years.
    Farmer Mac operates through two core 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 the 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,

[[Page 1251]]

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; and net income from operations. 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, 2004, Farmer Mac's core capital exceeded 
statutory requirements. Additionally, Farmer Mac's regulatory capital 
(core capital plus the allowance for loan loses) exceeded the amount of 
required regulatory capital as determined by the risk-based capital 
rule, with which Farmer Mac was required to be in compliance on May 23, 
2002.

                               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 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      2004 actual   2005 est.   2006 est.
----------------------------------------------------------------------------
2111  Limitation on guaranteed loans....
2131  Guaranteed loan commitments.......         830
                                           ---------   ---------  ----------
2150  Total guaranteed loan commitments.         830
----------------------------------------------------------------------------

    Cumulative balance of guaranteed loans 
                outstanding:
2210  Outstanding, start of year........       5,642       5,549       5,549
2231  Disbursements of new guaranteed 
        loans...........................         830
2251  Repayments and prepayments........        -923
                                           ---------   ---------  ----------
2290    Outstanding, end of year........       5,549       5,549       5,549
----------------------------------------------------------------------------

    Memorandum:
2299  Guaranteed amount of guaranteed 
        loans outstanding, end of year..         830
---------------------------------------------------------------------------

                             Balance Sheet (in millions of dollars)

-----------------------------------------------------------------------------------------------
Identification code   99-4180-0-3-351

2003 actual

2004 actual

-----------------------------------------------------------------------------------------------
    ASSETS:
1201

Investment in securities

1,083

949

1206

Receivables, net

39

54

1207

Advances and prepayments

18



      Net value of assets related to 
          direct loans receivable:

1401

Direct loans receivable, gross

2,501

2,244

1402

Interest receivable

42

38





1499

Net present value of assets related to direct loans

2,543

2,282

1801

Cash and other monetary assets

513

500





1999

Total assets

4,196

3,785

    LIABILITIES:
2201

Accounts payable

98

75

2202

Interest payable

30

26

2203

Debt

3,838

3,424

2204

Liabilities for loan guarantees

26

32





2999

Total liabilities

3,992

3,557

    NET POSITION:
3300

Invested capital

204

228





3999

Total net position

204

228





4999

Total liabilities and net position

4,196

3,785

-----------------------------------------------------------------------------------------------
