Freddie Mac 2010 Annual Report Download - page 38

disruptions in the availability of mortgage finance, and protect taxpayers. See “Conservatorship and Related Matters —
Treasury Agreements.”
Securities and Exchange Commission
We are subject to the financial reporting requirements applicable to registrants under the Exchange Act, including the
requirement to file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Although our common stock is required to be registered under the Exchange Act, we continue to be exempt from
certain federal securities law requirements, including the following:
• Securities we issue or guarantee are “exempted securities” under the Securities Act and may be sold without
registration under the Securities Act;
• We are excluded from the definitions of “government securities broker” and “government securities dealer” under the
Exchange Act;
• The Trust Indenture Act of 1939 does not apply to securities issued by us; and
• We are exempt from the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as we are an
“agency, authority or instrumentality” of the U.S. for purposes of such Acts.
Legislative and Regulatory Developments
Dodd-Frank Act
The Dodd-Frank Act, which was signed into law on July 21, 2010, significantly changed the regulation of the financial
services industry, including by creating new standards related to regulatory oversight of systemically important financial
companies, derivatives, capital requirements, asset-backed securitization, mortgage underwriting, and consumer financial
protection. The Dodd-Frank Act will directly affect the business and operations of Freddie Mac by subjecting us to new and
additional regulatory oversight and standards, including with respect to our activities and products. We may also be affected
by provisions of the Dodd-Frank Act and implementing regulations that affect the activities of banks, savings institutions,
insurance companies, securities dealers, and other regulated entities that are our customers and counterparties.
At this time, it is difficult to assess fully the impact of the Dodd-Frank Act on Freddie Mac and the financial services
industry. Implementation of the Dodd-Frank Act is being accomplished through numerous rulemakings, many of which are
still in process. The final effects of the legislation will not be known with certainty until these rulemakings are complete.
The Dodd-Frank Act also mandates the preparation of studies on a wide range of issues, which could lead to additional
legislation or regulatory changes.
Recently initiated rulemakings that may have an impact on Freddie Mac include the following:
• The Financial Stability Oversight Council has published a notice of proposed rulemaking inviting public comment on
the criteria that will inform the Council’s designation of nonbank financial companies as subject to enhanced
supervision and prudential standards pursuant to the provisions of the Dodd-Frank Act, as well as the Council’s
processes and procedures for such designation. If Freddie Mac is so designated, it would be subject to Federal
Reserve supervision and to prudential standards that may include risk-based capital and leverage requirements,
liquidity requirements, resolution plan and credit exposure reporting requirements, concentration limits, contingent
capital requirements, enhanced public disclosures, short-term debt limits, and overall risk management requirements,
as well as other requirements and restrictions.
• The U.S. Commodity Futures Trading Commission, or CFTC, and the SEC recently published a proposed rule
regarding certain definitions in the Dodd-Frank Act, including the definitions of “swap dealer” and “major swap
participant.” If Freddie Mac is deemed to be a major swap participant, FHFA, in consultation with the CFTC and the
SEC, will be required to establish new rules with respect to our activities as a major swap participant regarding
capital requirements, and margin requirements for certain derivatives transactions. In addition, Freddie Mac would be
required to register with the CFTC and to comply with certain business conduct standards and reporting requirements.
Even if we are not deemed a major swap participant, we could become subject to new rules related to clearing,
trading, and reporting requirements for derivatives transactions.
We continue to review and assess the impact of these proposals. For more information, see “RISK FACTORS — Legal
and Regulatory Risks — The Dodd-Frank Act and related regulation may adversely affect our business activities and
financial results.”
SEC Regulation on Disclosure for Asset-Backed Securities
On January 20, 2011, the SEC adopted a rule requiring issuers of asset-backed securities to disclose specified
information concerning fulfilled and unfulfilled repurchase requests relating to the assets backing such securities, including
certain historical information. This disclosure will first be required to be reported by February 14, 2012 (containing
35 Freddie Mac