Freddie Mac 2015 Annual Report Download - page 328

Financial Statements Notes to the Consolidated Financial Statements | Note 16
Freddie Mac 2015 Form 10-K 326
NOTE 16: REGULATORY CAPITAL
In October 2008, FHFA announced that it was suspending capital classification of us during
conservatorship in light of the Purchase Agreement. FHFA continues to monitor our capital levels, but the
existing statutory and FHFA-directed regulatory capital requirements are not binding during
conservatorship. We continue to provide quarterly submissions to FHFA on minimum capital.
REGULATORY CAPITAL STANDARDS
The GSE Act established minimum, critical, and risk-based capital standards for us. However, per
guidance received from FHFA, we no longer are required to submit risk-based capital reports to FHFA.
Prior to our entry into conservatorship, those standards determined the amounts of core capital that we
were to maintain to meet regulatory capital requirements. Core capital consisted of the par value of
outstanding common stock (common stock issued less common stock held in treasury), the par value of
outstanding non-cumulative, perpetual preferred stock, additional paid-in capital and retained earnings
(accumulated deficit), as determined in accordance with GAAP.
Minimum Capital
The minimum capital standard required us to hold an amount of core capital that was generally equal to
the sum of 2.50% of aggregate on-balance sheet assets and approximately 0.45% of the sum of our PCs
held by third parties and other aggregate off-balance sheet obligations.
Pursuant to regulatory guidance from FHFA, our minimum capital requirement was not affected by
adoption of amendments to the accounting guidance for transfers of financial assets and consolidation of
VIEs effective January 1, 2010. Specifically, upon adoption of these amendments, FHFA directed us, for
purposes of minimum capital, to continue reporting single-family PCs and certain other securitization
products held by third parties using a 0.45% capital requirement. FHFA reserves the authority under the
GSE Act to raise the minimum capital requirement for any of our assets or activities.
Critical Capital
The critical capital standard required us to hold an amount of core capital that was generally equal to the
sum of 1.25% of aggregate on-balance sheet assets and approximately 0.25% of the sum of our PCs
held by third parties and other aggregate off-balance sheet obligations.
PERFORMANCE AGAINST REGULATORY CAPITAL STANDARDS
The table below summarizes our minimum capital requirements and deficits and net worth.
(in millions) December 31, 2015 December 31, 2014
GAAP net worth $ 2,940 $2,651
Core capital (deficit)(1)(2) $ (70,549) $ (71,415)
Less: Minimum capital requirement(1) 19,687 20,090
Minimum capital surplus (deficit)(1) $ (90,236) $ (91,505)
(1) Core capital and minimum capital figures for December 31, 2015 are estimates. FHFA is the authoritative source for our
regulatory capital.