Fannie Mae 2009 Annual Report Download - page 40

•Issuances of Our Securities. We are authorized, upon the approval of the Secretary of the Treasury, to
issue debt obligations and mortgage-related securities. Neither the U.S. government nor any of its
agencies guarantees, directly or indirectly, our debt or mortgage-related securities.
•Exemptions for Our Securities. Securities we issue are exempted securities under laws administered by
the SEC, except that as a result of the 2008 Reform Act, our equity securities are not treated as exempted
securities for purposes of Sections 12, 13, 14 or 16 of the Securities Exchange Act of 1934 (the
“Exchange Act”). Consequently, we are required to file periodic and current reports with the SEC,
including annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on Form 8-K.
However, we are not required to file registration statements with the SEC under the Securities Act of
1933 (the “Securities Act”) with respect to offerings of our securities pursuant to this exemption.
•Exemption from Specified Taxes. We are exempt from taxation by states, counties, municipalities and
local taxing authorities, except for taxation by those authorities on our real property. We are not exempt
from the payment of federal corporate income taxes.
•Other Limitations and Requirements. We may not originate mortgage loans or advance funds to a
mortgage seller on an interim basis, using mortgage loans as collateral, pending the sale of the mortgages
in the secondary market. In addition, we may only purchase or securitize mortgages on properties located
in the United States, including the Commonwealth of Puerto Rico, and the territories and possessions of
the United States.
Regulation and Oversight of Our Activities
As a federally chartered corporation, we are subject to Congressional legislation and oversight. As a company
under conservatorship, our primary regulator has management authority over us in its role as our conservator.
The GSE Act, as amended in 2008, establishes FHFA as an independent agency with general supervisory and
regulatory authority over Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks (“FHLBs”). FHFA
assumed the duties of our former regulators, OFHEO, the predecessor to FHFA, and HUD, with respect to
safety and soundness and mission oversight of Fannie Mae and Freddie Mac. HUD remains our regulator with
respect to fair lending matters. We reference OFHEO in this report with respect to actions taken by our safety
and soundness regulator prior to the creation of FHFA on July 30, 2008. As applicable, we reference HUD in
this section with respect to actions taken by our mission regulator prior to the creation of FHFA on July 30,
2008. Our regulators also include the SEC and Treasury.
GSE Act
The GSE Act provides FHFA with safety and soundness authority that is stronger than the authority that was
available to OFHEO, and that is comparable to and in some respects broader than that of the federal banking
agencies. Among other things, the legislation gives FHFA the authority to raise capital levels above statutory
minimum levels, regulate the size and content of our portfolio, approve new mortgage products, and place the
GSEs into conservatorship or receivership. In general, we remain subject to regulations, orders and
determinations that existed prior to the enactment of the 2008 Reform Act until new ones are issued or made.
Below are some key provisions of the GSE Act.
Capital. FHFA has broad authority to establish risk-based capital standards to ensure that we operate in a
safe and sound manner and maintain sufficient capital and reserves. FHFA also has broad authority to increase
the level of our required minimum capital and to establish capital or reserve requirements for specific products
and activities, so as to ensure that we operate in a safe and sound manner. On October 9, 2008, FHFA
announced that our capital requirements will not be binding during the conservatorship. We describe our
capital requirements below under “Capital Adequacy Requirements.”
Portfolio. FHFA is required to establish standards governing our portfolio holdings, to ensure that they are
backed by sufficient capital and consistent with our mission and safe and sound operations. FHFA is also
required to monitor our portfolio and, in some circumstances, may require us to dispose of or acquire assets.
On January 30, 2009, FHFA published an interim final rule adopting, as the standard for our portfolio
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