Freddie Mac 2006 Annual Report Download - page 39

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continue to have a signiÑcant number of material weaknesses and other internal control deÑciencies that have not been fully
remediated and considerable challenges remain.
Interest-Rate Risk
Our interest-rate risk remains low. For 2006, PMVS-L and duration gap averaged 1 percent and zero months,
respectively.
Credit Risk
See ""RISK MANAGEMENT Ì Credit Risks'' for information about our credit risks and our strategies for managing
them.
Legislative and Regulatory Matters
We face a highly uncertain regulatory environment in light of GSE regulatory oversight legislation currently under
consideration in Congress. We generate a signiÑcant portion of our net income through our Retained portfolio. Currently, we
have in place a voluntary temporary growth limit on our Retained portfolio. GSE regulatory oversight legislation under
consideration in the House of Representatives would give our regulator substantial authority to regulate the amount and
composition of our portfolio investments and to require substantial reductions in those investments. This legislation also
includes provisions that would increase the regulator's authority to require us to maintain higher minimum and risk-based
capital levels and, for 2007 through 2011, require us to make an annual contribution to an aÅordable housing fund in an
amount equal to 1.2 basis points of our average total mortgage portfolio. See ""REGULATION AND SUPERVISION Ì
GSE Regulatory Oversight Legislation'' for more information regarding this bill. We cannot predict the prospects for the
enactment, timing or content of any Ñnal legislation. The provisions of this legislation, individually and in certain
combinations, could have a material adverse eÅect on our ability to fulÑll our mission, future earnings, stock price and
stockholder returns, the rate of growth in our fair value, and our ability to recruit qualiÑed oÇcers and directors.
27 Freddie Mac