Freddie Mac Differs With Regulator on 2007 Results

Washington Post (04/30/08) P. D1; Hilzenrath, David S.
In explaining its executive pay for last year, Freddie Mac on April 29 offered a different take on its 2007 performance than the assessment of the Office of Federal Housing Enterprise Oversight (OFHEO) in a recent report to Capitol Hill lawmakers. The compensation committee of the government-sponsored enterprise's board listed a variety of noteworthy achievements, including its "market-leading response to early signs of the subprime crisis" and a "successful offering of $6 billion in preferred stock in December 2007, which substantially strengthened our capital position." OFHEO interpreted those results from a different perspective, stating in an earlier report to Congress that Freddie Mac continues to be "a significant supervisory concern." OFHEO blamed the GSE's woes partly on its purchase of loans "with weak underwriting" and a "strategic decision" to take on riskier loans in 2006 and 2007, adding that the $6 billion December preferred stock offering that Freddie Mac directors cited as a success was actually a costly response to serious problems. In November, Freddie Mac became undercapitalized partly the result of poor planning, the watchdog suggested.