GOVERNMENT-SPONSORED ENTERPRISES

This chapter contains descriptions of the data on the Gov- credit to low- and moderate-income families and in under-
ernment-sponsored enterprises listed below. These enterprises served areas. Fannie Mae engages primarily in two forms
were established and chartered by the Federal Government of business: guaranteeing residential mortgage securities and
for public policy purposes. They are not included in the Fed- investing in portfolios of residential mortgages.
eral Budget because they are private companies, and their The Federal Government has equipped Fannie Mae with
securities are not backed by the full faith and credit of the certain advantages over wholly private firms in carrying out
Federal Government. However, because of their public pur- these activities. These include an exemption from State and
pose, detailed statements of financial condition are presented, local taxes (except real property taxes), and an exemption
to the extent such information is available, on a basis that of its debt and mortgage securities from Securities and Ex-
is as consistent as practicable with the basis for the budget change Commission registration requirements. An additional
data of Government agencies. These statements are not re- advantage is that the Secretary of the Treasury may purchase
viewed by the President; they are presented as submitted and hold up to $2.25 billion of securities issued by Fannie
by the enterprises. Mae under terms and conditions and at prices determined
by the Secretary to be appropriate. Securities guaranteed and
—The Federal National Mortgage Association and the Fed- debt issued by Fannie Mae are solely the corporation’s obliga-
eral Home Loan Mortgage Corporation provide assistance tions and are not backed by the full faith and credit of the
to the secondary market for residential mortgages. U.S. Government. The common stock of the corporation is
—The Federal Home Loan Banks assist thrift institutions, owned by the public, is fully transferable, and trades on the
banks, insurance companies, and credit unions in pro- New York, Midwest, and Pacific stock exchanges.
viding financing for housing and community development. Fannie Mae was established in 1938 to assist private mar-
kets in providing a steady supply of funds for housing. Fannie
—Institutions of the Farm Credit System, which include Mae was originally a subsidiary of the Reconstruction Finance
the Agricultural Credit Bank and Farm Credit Banks, Corporation and was permitted to purchase only loans insured
provide financial assistance to agriculture. They are regu- by the Federal Housing Administration (FHA). In 1954,
lated by the Farm Credit Administration. Fannie Mae was restructured as a mixed ownership (part
—The Federal Agricultural Mortgage Corporation, under government, part private) corporation. Legislation directed
the regulation of the Farm Credit Administration, pro- the sale of the Government’s remaining interest in Fannie
vides a secondary mortgage market for agricultural real Mae in 1968 and completed the transformation to private
estate and rural housing loans as well as for farm and shareholder ownership in 1970. Using the proceeds from the
business loans guaranteed by the U.S. Department of sale of subordinated debentures, Fannie Mae paid the Treas-
Agriculture. ury $216 million for the Government’s preferred stock, which
f
was retired, and for the Treasury’s interest in the corpora-
tion’s earned surplus. As a result, the corporation was taken
FEDERAL NATIONAL MORTGAGE off the Federal Budget.
In 1992, the Congress reaffirmed and clarified Fannie Mae’s
ASSOCIATION
role in the housing finance system through charter act
PORTFOLIO PROGRAMS amendments included in the Federal Housing Enterprises Fi-
nancial Safety and Soundness Act of 1992 (Act). Fannie Mae’s
Status of Direct Loans (in millions of dollars) charter purposes, as amended by the Act, are: ‘‘to provide
2006 actual 2007 est. 2008 est.
stability in the secondary market for residential mortgages;
Identification code 99–2500–0–3–371
respond appropriately to the private capital market; provide
1131 Direct loan obligations .................................................. ................... ................... ................... ongoing assistance to the secondary market for residential
1150 Total direct loan obligations ......................................... ................... ................... ................... mortgages (including activities relating to mortgages on hous-
ing for low- and moderate-income families involving a reason-
Cumulative balance of direct loans outstanding: able economic return that may be less than the return earned
1210 Outstanding, start of year ............................................. ................... ................... ................... on other activities); and promote access to mortgage credit
Disbursements:
1231 Direct loan disbursements ........................................ ................... ................... ...................
throughout the Nation (including central cities, rural areas,
1232 Purchase of loans assets .......................................... ................... ................... ................... and underserved areas) by increasing the liquidity of mort-
1251 Repayments: Repayments and prepayments ................. ................... ................... ................... gage investments and improving the distribution of invest-
1264 Write-offs for default: Other adjustments, net ............. ................... ................... ................... ment capital for residential mortgage financing.’’ For addi-
1290 Outstanding, end of year .......................................... ................... ................... ...................
tional discussion and analyses of Fannie Mae, please see the
Analytical Perspectives volume of the Budget documents.
Note: Consistent with Government-wide practice for GSEs, information for 2007 and 2008 was not required
to be collected. Balance Sheet (in millions of dollars)
The Federal National Mortgage Association (Fannie Mae) Identification code 99–2500–0–3–371 2005 actual 2006 actual
is a Government-sponsored enterprise (GSE) in the housing
ASSETS:
finance market. The Administration has announced a proposal 1101 Fund balances .............................................................................. .................... ....................
to strengthen regulation of all the housing GSEs, including Investments in US securities:
Fannie Mae. 1102 Treasury securities, par ........................................................ .................... ....................
As a housing GSE, Fannie Mae is a Federally chartered, 1104 Other ....................................................................................... .................... ....................
Net value of assets related to direct loans receivable and
privately owned company with a public mission to provide acquired defaulted guaranteed loans receivable:
stability and to increase the liquidity of the residential mort- 1601 Direct loans (net of discount) ............................................ .................... ....................
gage market and to help increase the availability of mortgage 1602 Federal Agencies ................................................................... .................... ....................
1185
1186 FEDERAL NATIONAL MORTGAGE ASSOCIATION—Continued THE BUDGET FOR FISCAL YEAR 2008

PORTFOLIO PROGRAMS—Continued 1603 Allowance for estimated uncollectible loans and interest
(–) ...................................................................................... .................... ....................
Balance Sheet (in millions of dollars)—Continued
1699 Value of assets related to direct loans ..................... .................... ....................
Identification code 99–2500–0–3–371 2005 actual 2006 actual
1999 Total assets ........................................................................... .................... ....................
LIABILITIES:
1603 Allowance for estimated uncollectible loans and interest 2104 Resources payable ........................................................................ .................... ....................
(–) ...................................................................................... .................... ....................
2999 Total liabilities ...................................................................... .................... ....................
1699 Value of assets related to direct loans ..................... .................... ....................
1801 Cash and other monetary assets .............................................. .................... .................... 4999 Total liabilities and net position ............................................... .................... ....................
1803 Property, plant and equipment, net .......................................... .................... ....................
f
1999 Total assets ........................................................................... .................... ....................
LIABILITIES:
2101 Accounts payable ......................................................................... .................... .................... FEDERAL HOME LOAN MORTGAGE
2102 Accrued interest payable ............................................................. .................... .................... CORPORATION
2105 Other .............................................................................................. .................... ....................
2203 Debt ............................................................................................... .................... .................... PORTFOLIO PROGRAMS
2204 Estimated liability for loan guarantees ..................................... .................... ....................
2206 Pension and other actuarial liabilities ...................................... .................... .................... Status of Direct Loans (in millions of dollars)
2207 Subtotal, Federal taxes payable ................................................. .................... ....................
Identification code 99–4420–0–3–371 2006 actual 2007 est. 2008 est.
2999 Total liabilities ...................................................................... .................... ....................
NET POSITION: 1131 Direct loan obligations .................................................. ................... ................... ...................
3300 Cumulative results of operations ............................................... .................... ....................
3300 Change in Stockholder Equity .................................................... .................... .................... 1150 Total direct loan obligations ......................................... ................... ................... ...................
3999 Total net position ................................................................. .................... ....................
Cumulative balance of direct loans outstanding:
4999 Total liabilities and net position ............................................... .................... .................... 1210 Outstanding, start of year ............................................. ................... ................... ...................
1231 Disbursements: Direct loan disbursements ................... ................... ................... ...................
1251 Repayments: Repayments and prepayments ................. ................... ................... ...................
f
1290 Outstanding, end of year .......................................... ................... ................... ...................
MORTGAGE-BACKED SECURITIES
Note: Consistent with Government-wide practice for GSEs, information for 2007 and 2008 was not required
to be collected.
Status of Direct Loans (in millions of dollars)

Identification code 99–2501–0–3–371 2006 actual 2007 est. 2008 est.

The Federal Home Loan Mortgage Corporation (Freddie
Mac) is a Government-sponsored enterprise (GSE) in the
1131 Direct loan obligations .................................................. ................... ................... ................... housing finance market. The Administration has announced
1150 Total direct loan obligations ......................................... ................... ................... ................... a proposal to strengthen regulation of all the housing GSEs,
including Freddie Mac.
Cumulative balance of direct loans outstanding: As a housing GSE, Freddie Mac is a Federally-chartered,
1210 Outstanding, start of year ............................................. ................... ................... ................... shareholder-owned, private company with a public mission
1231 Disbursements: Direct loan disbursements ................... ................... ................... ...................
1251 Repayments: Repayments and prepayments ................. ................... ................... ...................
to provide stability and increase the liquidity of the residen-
tial mortgage market, and to help increase the availability
1290 Outstanding, end of year .......................................... ................... ................... ................... of mortgage credit to low- and moderate-income families and
in underserved areas. Freddie Mac engages primarily in two
Note: Consistent with Government-wide practice for GSEs, information for 2007 and 2008 was not required forms of business: guaranteeing residential mortgage securi-
to be collected.
ties and investing in portfolios of residential mortgages.
According to accounting practices for private corporations, The Federal Government has equipped Freddie Mac with
the mortgages in the pools of loans supporting the mortgage- certain advantages over wholly private firms in carrying out
backed securities are considered to be owned by the holders these activities. These advantages include an exemption from
of these securities. Consequently, on the books of Fannie Mae, State and local taxes (except real property taxes), and an
these mortgages are not considered assets and the securities exemption for its debt and mortgage securities from Securities
outstanding are not considered liabilities. However, the con- and Exchange Commission registration requirements. An ad-
cepts of the budget of the U.S. Government consider these ditional advantage is that the Secretary of the Treasury may
mortgages and mortgage-backed securities to be assets and purchase and hold up to $2.25 billion of securities issued
liabilities, respectively, of Fannie Mae. For the purposes of by Freddie Mac under terms and conditions and at prices
this document, therefore, they are presented as assets and determined by the Secretary to be appropriate. Securities
liabilities in the accompanying schedules. On the schedule guaranteed and debt issued by Freddie Mac are explicitly
of Status of Direct Loans for mortgage-backed securities, the not backed by the full faith and credit of the U.S. Govern-
items labeled ‘‘New loans’’ and ‘‘Recoveries: Repayments and ment. The common stock of the corporation is owned by pri-
prepayments’’ are budgetary terms. However, from Fannie vate shareholders, is fully transferable, and trades on the
Mae’s perspective, these items are ‘‘Amounts issued’’ and New York and Pacific stock exchanges.
‘‘Amounts passed through to the holders of securities’’, respec- Freddie Mac was established in 1970 under the Emergency
tively. Home Finance Act. The Congress chartered Freddie Mac to
Financial data for Fannie Mae is not presented here be- provide mortgage lenders with an organized national sec-
cause Fannie Mae has not provided audited financial results ondary market enabling them to manage their conventional
for 2006. mortgage portfolio more effectively and gain indirect access
to a ready source of additional funds to meet new demands
Balance Sheet (in millions of dollars) for mortgages. Freddie Mac serves as a conduit facilitating
Identification code 99–2501–0–3–371 2005 actual 2006 actual the flow of investment dollars from the capital markets to
mortgage lenders, and ultimately, to homebuyers.
ASSETS:
Net value of assets related to direct loans receivable and
The Financial Institutions Reform, Recovery, and Enforce-
acquired defaulted guaranteed loans receivable: ment Act of 1989 (FIRREA) significantly changed the cor-
1601 Direct loans, gross ............................................................... .................... .................... porate governance of Freddie Mac. The company’s three mem-
GOVERNMENT-SPONSORED ENTERPRISES FEDERAL HOME LOAN BANK SYSTEM 1187

ber Board of Directors, which had corresponded with the Fed- FEDERAL HOME LOAN BANK SYSTEM
eral Home Loan Bank Board, was replaced with an eighteen
member Board of Directors. In addition, FIRREA converted FEDERAL HOME LOAN BANKS
Freddie Mac’s 60 million shares of non-voting, senior partici- Status of Direct Loans (in millions of dollars)
pating preferred stock into voting common stock.
Financial data for Freddie Mac is not presented here be- Identification code 99–4200–0–3–371 2006 actual 2007 est. 2008 est.

cause Freddie Mac has not provided audited financial results 1131 Direct loan obligations ............................ 7,475,995 .................. ..................
for 2006. For additional discussion and analyses of Freddie
1150 Total direct loan obligations ................... 7,475,995 .................. ..................
Mac, please see the Analytical Perspectives volume of the
Budget documents. Cumulative balance of direct loans out-
standing:
Balance Sheet (in millions of dollars) 1210 Outstanding, start of year ...................... 722,553 .................. ..................
1231 Advances made to members and mort-
Identification code 99–4420–0–3–371 2005 actual 2006 actual gage loans purchased from members 7,475,995 .................. ..................
1251 Principal collected on advances and
ASSETS: mortgage loans ................................... –
1201 Investments in other securities, net .......................................... .................... .................... 7,453,327 .................. ..................
1206 Receivables, net ........................................................................... .................... .................... 1261 Change in market value adjustments
associated with Statement of Finan-
Net value of assets related to direct loans receivable and
cial Accounting Standards No. 133 –7,328 .................. ..................
acquired defaulted guaranteed loans receivable:
1601 Direct loans, gross ............................................................... .................... .................... 1290 Outstanding, end of year .................... 743,855 .................. ..................
1603 Allowance for estimated uncollectible loans and interest
(–) ...................................................................................... .................... ....................
The Federal Home Loan Bank System is a Government-
1699 Value of assets related to direct loans ..................... .................... .................... sponsored enterprise (GSE) in the housing finance market.
1801 Cash and other monetary assets .............................................. .................... ....................
1803 Property, plant and equipment, net .......................................... .................... ....................
The Administration has announced a proposal to strengthen
1901 Other assets ................................................................................. .................... .................... regulation of all the housing GSEs, including the Federal
Home Loan Bank System.
1999 Total assets ........................................................................... .................... .................... The Federal Home Loan Banks were chartered by the Fed-
LIABILITIES: eral Home Loan Bank Board under the authority of the Fed-
2101 Accounts payable ......................................................................... .................... ....................
eral Home Loan Bank Act of 1932 (Act). The 12 Federal
2202 Interest payable ............................................................................ .................... ....................
2203 Debt ............................................................................................... .................... ....................
Home Loan Banks (FHLBanks) are under the supervision
2207 Other .............................................................................................. .................... .................... of the Federal Housing Finance Board (FHFB). The common
mission of FHLBanks is to facilitate the extension of credit
2999 Total liabilities ...................................................................... .................... .................... through their members. To accomplish this mission,
NET POSITION:
FHLBanks make loans, called advances, and provide other
3100 Invested capital ............................................................................ .................... ....................
credit products and services to their 8,149 member commer-
3999 Total net position ................................................................. .................... .................... cial banks, savings associations, insurance companies, and
credit unions. Advances and letters of credit must be fully
4999 Total liabilities and net position ............................................... .................... ....................
secured by eligible collateral and long-term advances may
be made only for the purpose of providing funds for residen-
f
tial housing finance. However, ‘‘community financial institu-
tions’’ may also use long-term advances to finance small busi-
MORTGAGE-BACKED SECURITIES nesses, small farms, and small agribusinesses. Additionally,
specialized advance programs provide funds for community
Status of Direct Loans (in millions of dollars) reinvestment and affordable housing programs. All regulated
2006 actual 2007 est. 2008 est.
financial depositories and insurance companies engaged in
Identification code 99–4440–0–3–371
residential housing finance are eligible for membership. Each
1111 Limitation on direct loans ............................................. ................... ................... ................... FHLBank operates in a geographic district designated by the
1131 Direct loan obligations .................................................. ................... ................... ................... Board and together FHLBanks cover all of the United States,
1150 Total direct loan obligations ......................................... ................... ................... ...................
as well as the District of Columbia, Puerto Rico, the Virgin
Islands, Guam, American Samoa, and the Northern Mariana
Cumulative balance of direct loans outstanding: Islands.
1210 Outstanding, start of year ............................................. ................... ................... ................... The principal source of funds for the lending operation is
1231 Disbursements: Direct loan disbursements ................... ................... ................... ................... the sale of consolidated obligations to the public. The consoli-
1251 Repayments: Repayments and prepayments ................. ................... ................... ................... dated obligations are not guaranteed by the U.S. Government
as to principal or interest. Other sources of lendable funds
1290 Outstanding, end of year .......................................... ................... ................... ...................
include members’ deposits and capital. Funds not immediately
needed for advances to members are invested.
Note: Consistent with Government-wide practice for GSEs, information for 2007 and 2008 was not required
to be collected. The capital stock of the Federal Home Loan Banks is owned
entirely by the members. Initially the U.S. Government pur-
chased stock of the banks in the amount of $125 million.
Balance Sheet (in millions of dollars) The banks had repurchased the Government’s investment in
Identification code 99–4440–0–3–371 2005 actual 2006 actual full by mid-1951.
The Act, as amended in 1989, requires each FHLBank to
ASSETS: operate an Affordable Housing Program (AHP). Each
1901 Underlying Mortgages ................................................................... .................... ....................
FHLBank provides subsidies in the form of direct grants or
1999 Total assets ........................................................................... .................... .................... below-market rate advances for members that use the funds
LIABILITIES: for qualifying affordable housing projects. Each of the
2104 Resources payable ........................................................................ .................... .................... FHLBanks must set aside annually the greater of $100 mil-
2999 Total liabilities ...................................................................... .................... ....................
lion or 10 percent of its previous year’s net earnings for the
AHP. The Act, as amended in 1999, also requires that
1188 FEDERAL HOME LOAN BANK SYSTEM—Continued THE BUDGET FOR FISCAL YEAR 2008

FEDERAL HOME LOAN BANKS—Continued AGRICULTURAL CREDIT BANK

FHLBanks contribute 20 percent of net earnings annually CoBank, ACB is headquartered in Denver, Colorado and
to assist in the payment of interest on bonds issued by the serves eligible cooperatives nationwide, and provides funding
Resolution Funding Corporation. to Agricultural Credit Associations (ACAs) in two of its re-
In 2002, the Administration requested all GSEs, including gions. CoBank, ACB is the only Agricultural Credit Bank
FHLBanks, to voluntarily register their equity securities with (ACB) in the Farm Credit System. An ACB operates under
the Securities and Exchange Commission (SEC). This vol- statutory authority that combines the authorities of a Farm
untary registration is part of the Administration’s efforts to Credit Bank (FCB) and a Bank for Cooperatives (BC). In
have GSEs undergo the same scrutiny process as other cor- exercising its FCB authority, CoBank, ACB’s charter limits
porate enterprises. FHFB adopted a rule on June 23, 2004 its lending to ACAs located in the northeast and northwest
that requires each FHLBank to register a class of its stock. regions of the country. As an entity lending to Cooperatives,
All of the Federal Home Loan Banks complied by 2006. CoBank is independently chartered to provide credit and re-
(Freddie Mac has failed to commence registration with SEC, lated services nationwide to eligible cooperatives primarily
in spite of its prior commitment to do so. Fannie Mae reg- engaged in farm supply, grain, marketing, and processing
istered with the SEC effective March 31, 2003, but has not (including sugar and dairy). CoBank also makes loans to rural
filed financial statements for 2005 or 2006.) utilities, including telecommunications companies and it pro-
For additional discussion and analyses of the FHLBanks, vides international loans for the financing of agricultural ex-
please see the Analytical Perspectives volume of the Budget. ports.

Balance Sheet (in millions of dollars) Status of Direct Loans (in millions of dollars)

2005 actual 2006 actual Identification code 99–4130–0–3–351 2006 actual 2007 est. 2008 est.
Identification code 99–4200–0–3–371
Position with respect to appropriations act limitation
ASSETS:
Investments in US securities: on obligations:
1102 Treasury securities, net ........................................................ 103 102 1111 Limitation on direct loans ............................................. ................... ................... ...................
1201 Investments in other securities, net .......................................... 260,037 274,926 1131 Direct loan obligations .................................................. 95,437 101,162 107,737
1206 Accounts receivable ...................................................................... 3,246 4,186
1150 Total direct loan obligations ..................................... 95,437 101,162 107,737
1401 Net value of assets related to direct loans receivable .......... 722,542 743,849
1801 Cash and other monetary assets .............................................. 346 329
1803 Property, plant and equipment, net .......................................... 199 208 Cumulative balance of direct loans outstanding:
1901 Other assets ................................................................................. 1,447 1,890 1210 Outstanding, start of year ............................................. 25,122 28,764 30,476
1231 Disbursements: Direct loan disbursements ................... 95,436 101,162 107,737
1999 Total assets ........................................................................... 987,920 1,025,489 1251 Repayments: Repayments and prepayments ................. ¥91,803 ¥99,430 ¥105,737
LIABILITIES: Write-offs for default:
2101 REFCORP and Affordable Housing Program .............................. 896 715 1263 Direct loans ............................................................... ................... ¥20 ¥20
2202 Interest payable ............................................................................ 6,029 8,061 1264 Other adjustments, net ............................................. 9 ................... ...................
2203 Debt issued under borrowing authority ..................................... 904,945 944,039
2207 Deposit funds and other borrowings ......................................... 19,235 18,210 1290 Outstanding, end of year .......................................... 28,764 30,476 32,456
2207 Other .............................................................................................. 12,354 8,910

2999 Total liabilities ...................................................................... 943,459 979,935 Balance Sheet (in millions of dollars)
NET POSITION:
3100 Invested capital ............................................................................ 44,461 45,554 Identification code 99–4130–0–3–351 2005 actual 2006 actual

3999 Total equity ............................................................................ 44,461 45,554 ASSETS:

Non-Federal assets:
4999 Total liabilities and equity ......................................................... 987,920 1,025,489 1201 Cash and investment securities ................................................. 7,184 7,752
1206 Accrued interest receivable on loans ........................................ 169 220
Note: Consistent with Government-wide practice for GSEs, information for 2007 and 2008 was not required Net value of assets related to direct loans receivable and
to be collected. acquired defaulted guaranteed loans receivable:
f 1601 Direct loans, gross ...................................................................... 25,122 28,763
1603 Allowance for estimated uncollectible loans and interest (–) –435 –441
FARM CREDIT SYSTEM 1699 Value of assets related to direct loans ................................... 24,687 28,322
1803 Other Federal assets: Property, plant and equipment, net .... 261 375
The Farm Credit System is a Government-sponsored enter-
prise that provides privately financed credit to agricultural 1999 Total assets .................................................................................. 32,301 36,669
and rural communities. The major functional entities of the LIABILITIES:
2104 Federal liabilities: Resources payable ........................................ 675 467
system are: 1) Agricultural Credit Bank (ACB); 2) Farm Cred- Non-Federal liabilities:
it Banks (FCB); and 3) direct lender associations. The history 2201 Consolidated systemwide and other bank bonds ..................... 28,342 32,547
and specific functions of the bank entities are discussed after 2201 Notes payable and other interest-bearing liabilities ................ 124 300
2202 Accrued interest payable ............................................................. 253 372
the presentation of financial schedules for each bank entity.
As part of the Farm Credit System (FCS), these entities are 2999 Total liabilities ............................................................................. 29,394 33,686
regulated and examined by the Farm Credit Administration NET POSITION:
3300 Cumulative results of operations ............................................... 2,907 2,983
(FCA), an independent Federal agency. The administrative
costs of FCA are financed by assessments of system institu- 3999 Total net position ........................................................................ 2,907 2,983
tions and the Federal Agricultural Mortgage Corporation. Sys-
4999 Total liabilities and net position ............................................... 32,301 36,669
tem 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 Statement of Changes in Net Worth (in thousands of dollars)
as to principal or interest. The bonds are backed by an insur- 99–4130 2005 actual 2006 actual 2007 est. 2008 est.
ance fund, administered by the Farm Credit System Insur-
Beginning balance of net worth ......................... 2,869,656 2,907,259 2,982,698 3,074,000
ance Corporation (FCSIC), an independent Federal agency
that collects insurance premiums from member banks to pay
Capital stock and participations issued ......... 6,269 5,368 1,000 1,000
its administrative expenses and fund insurance reserves. All Capital stock and participations retired ......... 67,534 71,242 51,113 44,590
of the banks’ current operating expenses are paid from their Net income ....................................................... 281,828 328,086 334,200 336,300
own income and do not require budgetary resources from Cash/Dividends/Patronage Distributions .......... –152,720 –174,335 –177,777 –171,710
the Federal Government. Other, net ......................................................... –30,240 –12,438 –15,008 –22,000
GOVERNMENT-SPONSORED ENTERPRISES FARM CREDIT SYSTEM—Continued 1189

Ending balance of net worth .............................. 2,907,259 2,982,698 3,074,000 3,173,000 Balance Sheet (in millions of dollars)

Identification code 99–4160–0–3–371 2005 actual 2006 actual

Financing Activities (in thousands of dollars)
ASSETS:
99–4130 2005 actual 2006 actual 2007 est. 2008 est. Non-Federal assets:
1201 Cash and investment securities ................................................. 19,513 23,353
Beginning balance of outstanding
1206 Accrued Interest Receivable ........................................................ 581 819
system obligations ...................... 26,040,303 28,341,749 32,546,980 34,496,938
Net value of assets related to direct loans receivable and
acquired defaulted guaranteed loans receivable:
Consolidated systemwide and other 1601 Direct loans, gross ...................................................................... 66,801 76,185
bank bonds issued ....................... 11,221,891 11,240,664 11,915,104 12,689,586 1603 Allowance for estimated uncollectible loans and interest (–) –19 –4
Consolidated systemwide and other
bank bonds retired ....................... 9,378,220 8,853,321 10,165,146 10,658,879 1699 Value of assets related to direct loans ................................... 66,782 76,181
Consolidated systemwide notes, net 311,845 1,817,888 200,000 250,000 1803 Other Federal assets: Property, plant and equipment, net .... 321 423
Other (Net) ........................................ 145,930 0 0 0
1999 Total assets .................................................................................. 87,197 100,776
Ending balance of outstanding system LIABILITIES:
obligations ................................... 28,341,749 32,546,980 34,496,938 36,777,645 2104 Federal liabilities: Resources payable ........................................ 397 386
Non-Federal liabilities:
f 2201 Consolidated systemwide and other bank bonds ..................... 80,993 93,939
2201 Notes payable and other interest-bearing liabilities ................ 368 437
2202 Accrued interest payable ............................................................. 592 884
FARM CREDIT BANKS
2999 Total liabilities ............................................................................. 82,350 95,646
Status of Direct Loans (in millions of dollars) NET POSITION:
3300 Cumulative results of operations ............................................... 4,847 5,130
Identification code 99–4160–0–3–371 2006 actual 2007 est. 2008 est.
3999 Total net position ........................................................................ 4,847 5,130
Position with respect to appropriations act limitation
on obligations: 4999 Total liabilities and net position ............................................... 87,197 100,776
1111 Limitation on direct loans ............................................. ................... ................... ...................
1131 Direct loan obligations .................................................. 140,542 150,395 160,184
Statement of Changes in Net Worth (in thousands of dollars)
1150 Total direct loan obligations ..................................... 140,542 150,395 160,184
99–4160 2005 actual 2006 actual 2007 est. 2008 est.
Cumulative balance of direct loans outstanding:
1210 Outstanding, start of year ............................................. 66,801 76,184 80,948 Beginning balance of net worth ......................... 4,520,633 4,846,675 5,129,876 5,347,437
1231 Disbursements: Direct loan disbursements ................... 140,541 151,043 160,858
1251 Repayments: Repayments and prepayments ................. ¥131,156 ¥146,279 ¥155,400 Capital stock and participations issued ......... 237,099 223,860 70,342 102,225
Write-offs for default: Capital stock and participations retired ......... 118,560 108,125 0 0
1263 Direct loans ............................................................... ¥2 ................... ................... Surplus Retired ................................................. 4,257 2,462 0 0
1264 Other adjustments, net ............................................. ................... ................... ................... Net income ....................................................... 521,660 503,366 509,823 538,784
Cash/Dividends/Patronage Distributions .......... –286,298 –349,463 –353,232 –363,159
1290 Outstanding, end of year .......................................... 76,184 80,948 86,406 Other, net ......................................................... –23,602 16,025 –9,372 –17,863

Note.—Loans outstanding at end of year do not include nonaccrual loans and sales contracts. Ending balance of net worth .............................. 4,846,675 5,129,876 5,347,437 5,607,424

The Agricultural Credit Act of 1987 (1987 Act) required Financing Activities (in thousands of dollars)
the Federal Land Banks (FLBs) and Federal Intermediate
Credit Banks (FICBs) to merge into a Farm Credit Bank 99–4160 2005 actual 2006 actual 2007 est. 2008 est.
(FCB) in each of the 12 Farm Credit districts. FCBs operate Beginning balance of outstanding
under statutory authority that combines the prior authorities system obligations ...................... 71,077,982 80,993,251 93,938,983 99,597,895
of a FLB and of a FICB. No merger occurred in the Jackson
district in 1988 because the FLB of Jackson was in receiver- Consolidated systemwide and other
ship. Pursuant to section 410(e) of the 1987 Act, as amended bank bonds issued ....................... 37,670,028 33,379,481 33,097,334 35,106,879
Consolidated systemwide and other
by the Farm Credit Banks Safety and Soundness Act of 1992, bank bonds retired ....................... 28,143,701 22,985,482 28,063,935 29,630,728
FICB of Jackson merged with FCB of Columbia on October Consolidated systemwide notes, net 383,675 2,551,733 625,513 667,335
1, 1993. Mergers and consolidations of FCBs across district Other, net .......................................... 5,267 0 0 0
lines that began in 1992 have continued to date. As a result
Ending balance of outstanding system
of this restructuring activity, 4 FCBs, headquartered in the obligations ................................... 80,993,251 93,938,983 99,597,895 105,741,381
following cities, remain: AgFirst FCB, Columbia, South Caro-
lina; AgriBank FCB, St. Paul, Minnesota; U.S. AgBank, FCB, f
Wichita, Kansas; and FCB of Texas, Austin, Texas.
FCBs serve as discount banks and as of October 1, 2006 FEDERAL AGRICULTURAL MORTGAGE CORPORATION
provided funds to 9 Federal Land Credit Associations (FLCA) (FARMER MAC)
and 86 Agricultural Credit Associations (ACAs). These direct
lender associations, in turn, make short-term production loans Farmer Mac is authorized under the Farm Credit Act of
and long-term real estate loans to eligible farmers and ranch- 1971 (Act), as amended by the Agricultural Credit Act of
ers, and their cooperatives; farm-related businesses; and rural 1987, to create a secondary market for agricultural real estate
homeowners. FCBs can also lend to local financing institu- and rural home mortgages. The Farmer Mac title of the Act
tions, including commercial banks, as authorized by the Farm was amended by the 1990 farm bill to authorize Farmer Mac
Credit Act of 1971, as amended. to purchase, pool, and securitize the guaranteed portions of
All the capital stock of FICB’s, from organization in 1923 farmer program, rural business, and community development
to December 31, 1956, was held by the U.S. Government. loans guaranteed by the United States Department of Agri-
The 1956 Act provided a long-range plan for the eventual culture (USDA). The Farmer Mac title was further amended
ownership of the credit banks by the production credit asso- in 1991 to clarify Farmer Mac’s authority to issue debt obliga-
ciations and the gradual retirement of the Government’s in- tions, provide for the establishment of minimum capital
vestment in the banks. This retirement was accomplished standards, establish the Office of Secondary Market Oversight
in full on December 31, 1968. The last of the Government at the Farm Credit Administration (FCA), and expand the
capital that had been invested in FLB’s was repaid in 1947. agency’s rulemaking authority. Most recently, the Farm Cred-
1190 FARM CREDIT SYSTEM—Continued THE BUDGET FOR FISCAL YEAR 2008

(FARMER MAC) Farmer Mac is subject to reporting requirements under se-

curities laws and its guaranteed mortgage-backed securities
it System Reform Act of 1996 (1996 Act) amended the Farmer are subject to registration with the Securities and Exchange
Mac title to allow Farmer Mac to purchase loans directly Commission under the 1933 and 1934 Securities Acts.
from lenders and to issue and guarantee mortgage-backed
securities without requiring that a minimum cash reserve REGULATION
or subordinated (first loss) interest be maintained by poolers Farmer Mac is Federally regulated by FCA, acting through
as had been required under its original authority. The 1996 its Office of Secondary Market Oversight (OSMO). FCA is
Act expanded FCA’s regulatory authority to include provisions responsible for the supervision, examination of, and rule-
for establishing a conservatorship or receivership, if nec- making for Farmer Mac.
essary, and provided for increased core capital requirements
at Farmer Mac phased in over three years. Status of Guaranteed Loans (in millions of dollars)
Farmer Mac operates through two core programs, ‘‘Farmer
Mac I,’’ which involves mortgage loans secured by first liens Identification code 99–4180–0–3–351 2006 actual 2007 est. 2008 est.
on agricultural real estate or rural housing (qualified loans), Position with respect to appropriations act limitation
and ‘‘Farmer Mac II,’’ which involves the guaranteed portions on commitments:
of USDA guaranteed loans. Farmer Mac operates by: i) pur- 2111 Limitation on guaranteed loans .................................... ................... ................... ...................
chasing, or committing to purchase, newly originated or exist- 2131 Guaranteed loan commitments ..................................... 2,907 ................... ...................
ing qualified loans or guaranteed portions from lenders; ii)
2150 Total guaranteed loan commitments ........................ 2,907 ................... ...................
purchasing ‘‘AgVantage’’ bonds backed by qualified loans or
guaranteed portions from lenders; and iii) exchanging quali- Cumulative balance of guaranteed loans outstanding:
fied loans or guaranteed portions for guaranteed securities. 2210 Outstanding, start of year ............................................. 5,126 7,058 7,058
Loans purchased by Farmer Mac are aggregated into pools 2231 Disbursements of new guaranteed loans ...................... 2,907 ................... ...................
that back Farmer Mac guaranteed securities which are held 2251 Repayments and prepayments ...................................... ¥975 ................... ...................
by Farmer Mac or sold into the capital markets. Farmer 2290 Outstanding, end of year .......................................... 7,058 7,058 7,058
Mac is intended to attract new capital for financing qualified
loans and guaranteed portions, foster increased long-term, Memorandum:
fixed-rate lending, and provide greater liquidity to agricul- 2299 Guaranteed amount of guaranteed loans outstanding,
tural and rural lenders. end of year ................................................................ 901 ................... ...................
Farmer Mac is governed by a 15 member Board of Direc-
tors. Ten Board members are elected by stockholders, includ- Balance Sheet (in millions of dollars)
ing five by the Farm Credit System and five by commercial
lenders. Five are appointed by the President, subject to Sen- Identification code 99–4180–0–3–351 2005 actual 2006 actual
ate confirmation.
ASSETS:
FINANCING Non-Federal assets:
Financial support and funding for Farmer Mac’s operations 1201 Investment in securities .............................................................. 1,594 1,896
1206 Receivables, net ........................................................................... 41 56
come from several sources: sale of common and preferred Net value of assets related to direct loans receivable:
stock; issuance of debt obligations; and net income. Under 1401 Direct loans receivable, gross .................................................... 2,140 2,084
procedures specified in the Act, Farmer Mac may issue obliga- 1402 Interest receivable ........................................................................ 45 52
tions to the U.S. Treasury in a cumulative amount not to
1499 Net present value of assets related to direct loans .............. 2,185 2,136
exceed $1.5 billion to fulfill its guarantee obligations. 1801 Other Federal assets: Cash and other monetary assets ........ 438 805
As of September 30, 2006, Farmer Mac’s core capital ex-
ceeded statutory requirements. Additionally, Farmer Mac’s 1999 Total assets .................................................................................. 4,258 4,893
regulatory capital (core capital plus the allowance for loan LIABILITIES:
Non-Federal liabilities:
losses) exceeded the amount of required regulatory capital 2201 Accounts payable ......................................................................... 47 34
as determined by the risk-based capital rule, with which 2202 Interest payable ............................................................................ 24 26
Farmer Mac was required to be in compliance on May 23, 2203 Debt ............................................................................................... 3,931 4,554
2002. 2204 Liabilities for loan guarantees ................................................... 20 34
GUARANTEES 2999 Total liabilities ............................................................................. 4,022 4,648
NET POSITION:
Farmer Mac provides a guarantee of timely payment of 3300 Invested capital ............................................................................ 236 245
principal and interest on securities backed by qualified loans
or pools of qualified loans. These securities are not guaran- 3999 Total net position ........................................................................ 236 245
teed by the United States, and are not ‘‘government securi- 4999 Total liabilities and net position ............................................... 4,258 4,893
ties’’.