Freddie Mac 2015 Annual Report Download - page 329

Financial Statements Notes to the Consolidated Financial Statements | Note 16
Freddie Mac 2015 Form 10-K 327
(2) Core capital excludes certain components of GAAP total equity (i.e., AOCI and the liquidation preference of the senior
preferred stock) as these items do not meet the statutory definition of core capital.
The Purchase Agreement provides that, if FHFA determines as of quarter end that our liabilities have
exceeded our assets under GAAP, Treasury will contribute funds to us in an amount at least equal to the
difference between such liabilities and assets.
Under the GSE Act, FHFA must place us into receivership if FHFA determines that our assets are and
have been less than our obligations for a period of 60 days. FHFA has notified us that the measurement
period for any mandatory receivership determination with respect to our assets and obligations would
commence no earlier than the SEC public filing deadline for our quarterly or annual financial statements
and would continue for 60 calendar days after that date. FHFA has advised us that, if, during that 60-day
period, we receive funds from Treasury in an amount at least equal to the deficiency amount under the
Purchase Agreement, the Director of FHFA will not make a mandatory receivership determination. If
funding has been requested under the Purchase Agreement to address a deficit in our net worth, and
Treasury is unable to provide us with such funding within the 60-day period specified by FHFA, FHFA
would be required to place us into receivership if our assets remain less than our obligations during that
60-day period.
At December 31, 2015, our assets exceeded our liabilities under GAAP; therefore, no draw is being
requested from Treasury under the Purchase Agreement. As of December 31, 2015, our aggregate
funding received from Treasury under the Purchase Agreement was $71.3 billion. This aggregate funding
amount does not include the initial $1 billion liquidation preference of senior preferred stock that we
issued to Treasury in September 2008 as an initial commitment fee and for which no cash was received.
SUBORDINATED DEBT COMMITMENT
In October 2000, we announced our adoption of a series of commitments designed to enhance market
discipline, liquidity, and capital. In September 2005, we entered into a written agreement with FHFA that
updated those commitments and set forth a process for implementing them. FHFA, as Conservator of
Freddie Mac, has suspended the requirements in the September 2005 agreement with respect to
issuance, maintenance, and reporting and disclosure of Freddie Mac subordinated debt during the term of
conservatorship and thereafter until directed otherwise.