Freddie Mac 2004 Annual Report Download - page 151

VOLUNTARY COMMITMENTS
The following provides updated information on the Voluntary Commitments we made in October 2000.
Additional information about our Voluntary Commitments is available on our website
(www.FreddieMac.com/investors).
Description Comments Status
1. Periodic Issuance of Subordinated Debt:
‚ We will issue publicly traded and externally ‚ We did not issue any Freddie SUBS» in
rated Freddie SUBS» on a semi-annual 2004. As a result of not having current
basis. consolidated Ñnancial statements, our ability
to issue subordinated debt may be limited.
‚ Freddie SUBS» will be issued in an amount ‚ At December 31, 2004, the ratio of ‚ As of December 31, 2004, we met this
such that ""Voluntary Commitments' capital'' Voluntary Commitments' capital less commitment.
less 0.45 percent of Outstanding PCs and 0.45 percent of Outstanding PCs and
Structured Securities will equal or exceed Structured Securities to total assets was
four percent of on-balance sheet assets by 4.6 percent.
October 2003. Voluntary Commitments'
capital is deÑned as the sum of Core capital
(eÅectively equal to Stockholders' equity
less AOCI, net of taxes), loan loss reserves
and Freddie SUBS» outstanding.
‚ We cannot determine this ratio as of the end ‚ We plan to update our disclosure for this
of any period in 2005 with speciÑcity until we commitment following the release of our
release the consolidated Ñnancial statements 2005 consolidated Ñnancial statements for
for the relevant period. the relevant period.
2. Liquidity Management and Contingency
Planning:
‚ We will comply with principles of sound ‚ For purposes of this commitment, we will ‚ As of December 31, 2004, we met this
liquidity management set forth by the Basel maintain liquidity needed to meet our commitment.
Committee on Banking Supervision and will obligations to pay principal and interest
maintain more than three months' worth of related to our outstanding debt maturities, to
liquidity (based on internal forecasts) pay PC investors the amounts due to them,
assuming we have no access to new issue to purchase mortgage loans and mortgage-
public debt markets. related securities that we have committed to
purchase as well as to fund operating
expenditures. To fund these obligations in
the event of market disruption, we could sell
some securities from our Retained portfolio
and liquidate non-mortgage investments
from our Cash and investments portfolio. In
addition, we could borrow against mortgage-
related securities that are a component of our
Retained portfolio by executing transactions
in the repurchase agreement market. (Our
ability to execute these and other strategies
may be adversely aÅected by market
conditions, operational constraints and other
factors.)
‚ In implementing this commitment, we will ‚ Assets that meet this deÑnition include Cash ‚ As of December 31, 2004, we met this
maintain at least Ñve percent of on-balance and cash equivalents (excluding operating commitment.
sheet assets in liquid, marketable, non- cash accounts, cash posted as collateral by
mortgage securities. We will also maintain derivative counterparties and certain other
additional, liquid mortgage securities for use balances), various non-mortgage investments
as collateral in short-term borrowings from such as municipal bonds, asset-backed
dealer counterparties. securities, commercial paper and certain
securities purchased under agreements to
resell (reverse repos). This commitment no
longer considers investments held by our
Securities Sales & Trading Group business
unit or as part of our external Money
Manager program as these operations ceased
activity during the fourth quarter of 2004.
‚ We cannot determine the percentage of on- ‚ We plan to update our disclosure for this
balance sheet assets in liquid, marketable, commitment following the release of our
non-mortgage securities as of the end of any 2005 consolidated Ñnancial statements for
period in 2005 with speciÑcity until we the relevant period.
release the consolidated Ñnancial statements
for the relevant period.
Freddie Mac
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