Freddie Mac 2004 Annual Report Download - page 5

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This brings together all of our back office and IT operations that previously were scattered
throughout the different business areas.
We are taking a very hard look at costs — striving to be a least-cost producer wherever this
fits our strategy. One goal this year is to arrest the growth in our General and Administrative
expenses. To do so, we have already cut some 1,300 consultants from the company’s payroll
through the early months of this year. We are hopeful our G&A costs have peaked and we see
further progress in the years ahead.
Some of our recent spending has been a classic case of making investments today to save money
tomorrow. For example, the new systems we are building will allow us to rely more on automated
internal controls over financial reporting, replacing many costly manual controls and reducing audit
costs. As our CFO Marty Baumann can attest, our large investments in this area will pay off not just
in better and more efficient accounting systems, but in a better-run company.
STRENGTHENING HOW WE ARE REGULATED
Since coming to Freddie Mac, I have made it clear we support sound legislation that will
strengthen GSE regulation and market confidence. Achieving this outcome has been my
highest priority. It’s unfortunate that a bill didn’t pass last year and we are working hard to
achieve one this year.
The genius of the GSE business model established by Congress is that it employs private capital
to achieve a vital public mission. In the political environment of the past year, the full meaning of
this point has often been obscured. So it is one I have made clearly and vigorously as part of the
legislative process. For the truth is, Freddie Mac’s investors provide capital that is indispensable
to fulfilling our mission with minimum risk — and maximum benefit — to the public.
That’s why my being a vigilant steward of your capital is not a diversion from my public mission
responsibilities. It advances those responsibilities.
CONCLUSION
Thanks to the foundation we laid and the steps we took in 2004, Freddie Mac is turning the
corner. This is a company working from traditional strengths and adding new ones: a strong
balance sheet and capital position; low and rigorously managed levels of risk; improved market
share and funding costs; and a stronger competitive position with customers. We’re doing
more on our affordable mission. And the year brought us that much closer to resolving our two
big remaining issues: GSE legislation and our financial reporting.
Going forward, we’ve got the right leadership for our most critical challenges, the right focus
on winning over customers, and the right plan to achieve operational excellence.
Thank you for investing in Freddie Mac. Your confidence in us has helped millions of America’s
families achieve homeownership. Our responsibility is to justify that confidence. And we are
fully committed to doing so.
Sincerely,
Richard F. Syron
Chairman and Chief Executive Officer