Freddie Mac 2004 Annual Report Download - page 206
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Please find page 206 of the 2004 Freddie Mac annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.-
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A failure by Freddie Mac to meet the target capital surplus would result in discussions between Freddie
Mac and OFHEO concerning the reason for such failure. If OFHEO were to determine, based on these
discussions and weekly monitoring, that Freddie Mac had unreasonably deviated from the framework
established by OFHEO, the company would be required to submit a remedial plan or take other remedial
steps.
In addition, Freddie Mac is required to obtain prior written approval from the Director of OFHEO before
engaging in certain capital transactions, including the repurchase of any shares of common stock, redemption
of any preferred stock or payment of preferred stock dividends above stated contractual rates. Freddie Mac
also must submit a written report to the Director of OFHEO after the declaration, but before the payment, of
any dividend on its common stock. The report must contain certain information on the amount of the
dividend, the rationale for the payment and the impact on Freddie Mac's capital surplus.
OFHEO indicated that this framework is temporary and will be lifted when the Director of OFHEO
determines that it should expire, based on Freddie Mac's reduction of operational risks, resumption of timely
regulatory reporting that complies with GAAP and certain other factors.
Management believes that this monitoring framework will provide OFHEO with a mechanism to ensure
that the company manages its business with continued prudence and appropriate levels of capital, taking into
account that the company is not currently able to produce timely Ñnancial statements.
Freddie Mac
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