Freddie Mac 2008 Annual Report Download - page 37

authority to prohibit or limit indemnification payments. In addition, on January 29, 2009, FHFA published a final rule setting
forth factors to be considered by FHFA in limiting golden parachute payments.
Subordinated Debt
FHFA has directed us to continue to make interest and principal payments on our subordinated debt, even if we fail to
maintain required capital levels. As a result, the terms of any of our subordinated debt that provide for us to defer payments
of interest under certain circumstances, including our failure to maintain specified capital levels, are no longer applicable. In
addition, the requirements in the agreement we entered into with FHFA in September 2005 with respect to issuance,
maintenance, and reporting and disclosure of Freddie Mac subordinated debt have been suspended during the term of
conservatorship and thereafter until directed otherwise. See “NOTE 10: REGULATORY CAPITAL — Subordinated Debt
Commitment” to our consolidated financial statements for more information regarding subordinated debt.
Department of Housing and Urban Development
HUD has authority over Freddie Mac with respect to fair lending. Our mortgage purchase activities are subject to
federal anti-discrimination laws. In addition, the GSE Act prohibits discriminatory practices in our mortgage purchase
activities, requires us to submit data to HUD to assist in its fair lending investigations of primary market lenders and requires
us to undertake remedial actions against lenders found to have engaged in discriminatory lending practices. In addition, HUD
periodically reviews and comments on our underwriting and appraisal guidelines for consistency with the Fair Housing Act
and the anti-discrimination provisions of the GSE Act.
Department of the Treasury
Under our charter, the Secretary of the Treasury has approval authority over our issuances of notes, debentures and
substantially identical types of unsecured debt obligations (including the interest rates and maturities of these securities), as
well as new types of mortgage-related securities issued subsequent to the enactment of the Financial Institutions Reform,
Recovery and Enforcement Act of 1989. The Secretary of the Treasury has performed this debt securities approval function
by coordinating GSE debt offerings with Treasury funding activities. In addition, our charter authorizes Treasury to purchase
Freddie Mac debt obligations not exceeding $2.25 billion in aggregate principal amount at any time.
The Reform Act granted the Secretary of the Treasury authority to purchase any obligations and securities issued by the
enterprises until December 31, 2009 on such terms and conditions and in such amounts as the Secretary may determine,
provided that the Secretary determines the purchases are necessary to provide stability to the financial markets, prevent
disruptions in the availability of mortgage finance, and protect taxpayers. For information on how Treasury has used this
authority, see “Conservatorship and Related Developments — Treasury Agreements.”
Securities and Exchange Commission
We are subject to the financial reporting requirements applicable to registrants under the Exchange Act, including the
requirement to file with the SEC annual reports on Form 10-K, quarterly reports on Form 10-Q and current reports on
Form 8-K. Although our common stock is required to be registered under the Exchange Act, we continue to be exempt from
certain federal securities law requirements, including the following:
• Securities we issue or guarantee are “exempted securities” under the Securities Act and may be sold without
registration under the Securities Act;
• We are excluded from the definitions of “government securities broker” and “government securities dealer” under the
Exchange Act;
• The Trust Indenture Act of 1939 does not apply to securities issued by us; and
• We are exempt from the Investment Company Act of 1940 and the Investment Advisers Act of 1940, as we are an
“agency, authority or instrumentality” of the United States for purposes of such Acts.
Emergency Economic Stabilization Act of 2008, or EESA
On October 3, 2008, former President Bush signed into law the EESA which among other actions, gave authority to
Treasury to purchase or guarantee troubled assets from financial institutions with significant operations in the U.S. The
EESA also required FHFA, as Conservator, to implement a plan for delinquent single-family and multifamily mortgage loans
(including mortgage-related securities and asset-backed securities) to maximize assistance for homeowners and encourage
servicers to take advantage of the HOPE for Homeowners Program implemented by HUD, or other available programs to
minimize foreclosure. FHFA submitted its first plan on December 2, 2008. FHFA continues to update its plan to maximize
assistance to homeowners and encourage servicers of underlying mortgages to take advantage of programs to minimize
foreclosures. We cannot predict the final content of the plan FHFA may implement or its effect on our business.
In addition, on November 11, 2008, FHFA announced the Streamlined Modification Program. We expect that our efforts
under the HASP will replace this program. See “MD&A — CREDIT RISKS — Mortgage Credit Risk — Loss Mitigation
Activities” for more information.
34 Freddie Mac