Freddie Mac 2008 Annual Report Download - page 18

of these types of obligations either in offering circulars (or supplements thereto) that we post on our website or in a current
report on Form 8-K, in accordance with a “no-action” letter we received from the SEC staff. In cases where the information
is disclosed in an offering circular posted on our website, the document will be posted on our website within the same time
period that a prospectus for a non-exempt securities offering would be required to be filed with the SEC.
The website address for disclosure about our debt securities is www.freddiemac.com/debt. From this address, investors
can access the offering circular and related supplements for debt securities offerings under Freddie Mac’s global debt facility,
including pricing supplements for individual issuances of debt securities.
Disclosure about our off-balance sheet obligations pursuant to some of the mortgage-related securities we issue can be
found at www.freddiemac.com/mbs. From this address, investors can access information and documents about our mortgage-
related securities, including offering circulars and related offering circular supplements.
We are providing our website addresses and the website address of the SEC solely for your information. Information
appearing on our website or on the SEC’s website is not incorporated into this annual report on Form 10-K.
Conservatorship and Related Developments
On September 7, 2008, the then Secretary of the Treasury and the Director of FHFA announced several actions taken by
Treasury and FHFA regarding Freddie Mac and Fannie Mae. The Director of FHFA stated that they took these actions “to
help restore confidence in Fannie Mae and Freddie Mac, enhance their capacity to fulfill their mission, and mitigate the
systemic risk that has contributed directly to the instability in the current market.” These actions included the following:
• placing us and Fannie Mae in conservatorship;
• the execution of the Purchase Agreement, pursuant to which we issued to Treasury both senior preferred stock and a
warrant to purchase common stock; and
• the establishment of a temporary secured lending credit facility that is available to us until December 31, 2009, which
was effected through the execution of the Lending Agreement.
We refer to the Purchase Agreement, the warrant, and the Lending Agreement as the “Treasury Agreements.”
Entry Into Conservatorship
On September 6, 2008, at the request of the then Secretary of the Treasury, the Chairman of the Federal Reserve and
the Director of FHFA, our Board of Directors adopted a resolution consenting to the appointment of a conservator. After
obtaining this consent, the Director of FHFA appointed FHFA as our Conservator on September 6, 2008, in accordance with
the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, or the GSE Act, as amended by the Reform
Act. Upon its appointment, the Conservator immediately succeeded to all rights, titles, powers and privileges of Freddie Mac,
and of any stockholder, officer or director of Freddie Mac with respect to Freddie Mac and its assets, and succeeded to the
title to all books, records and assets of Freddie Mac held by any other legal custodian or third party. During the
conservatorship, the Conservator has delegated certain authority to the Board of Directors to oversee, and management to
conduct, day-to-day operations so that the company can continue to operate in the ordinary course of business. The
Conservator has eliminated the payment of dividends on common and preferred stock during the conservatorship, except for
dividends on the senior preferred stock. We describe the terms of the conservatorship and the powers of our Conservator in
detail below under “Supervision of our Business During Conservatorship,” “Managing our Business During
Conservatorship” and “Powers of the Conservator.”
There is significant uncertainty as to whether or when we will emerge from conservatorship, as it has no specified
termination date, or what changes may occur to our business structure during or following our conservatorship, including
whether we will continue to exist. However, we are not aware of any current plans of our Conservator to significantly change
our business structure in the near-term.
We receive substantial support from Treasury, FHFA as our Conservator and regulator and the Federal Reserve. On
February 18, 2009, Treasury Secretary Geithner issued a statement outlining further efforts by Treasury to strengthen its
commitment to us by increasing the funding available under the Purchase Agreement from $100 billion to $200 billion,
affirming Treasury’s plans to continue purchasing Freddie Mac mortgage-related securities and increasing the limit on our
mortgage-related investments portfolio by $50 billion to $900 billion with a corresponding increase in the amount of
allowable debt outstanding. As of the filing of this annual report on Form 10-K, the Purchase Agreement has not been
amended to reflect the increase in Treasury’s commitment. We are dependent upon the continued support of Treasury and
FHFA in order to continue operating our business. Our ability to access funds from Treasury under the Purchase Agreement
is critical to keeping us solvent and avoiding the appointment of a receiver by FHFA under statutory mandatory receivership
provisions.
In November 2008, we received $13.8 billion from Treasury under the Purchase Agreement, and we expect to receive
$30.8 billion in March 2009 pursuant to a draw request that FHFA submitted to Treasury on our behalf. Upon funding of the
$30.8 billion draw request, the aggregate liquidation preference on the senior preferred stock owned by Treasury will
15 Freddie Mac