Armando Falcon Jr., director of the Office of Federal Housing Enterprise Oversight, today directed Freddie Mac to maintain a mandatory target capital surplus of 30 percent over its minimum capital requirement. The regulator also said the corporation must seek OFHEO’s advance approval for certain corporate transactions and file weekly reports that include its projected capital position and other information.

The regulator wants to ensure that Freddie continues to maintain an adequate capital surplus until it reduces its operational risk and produced timely certified financial statements.

“This capital directive by OFHEO will help to assure the public and Congress that Freddie Mac will remain financially healthy as it works to restore the public’s trust,” Falcon said.

The requirements, which became effective immediately, follow OFHEO’s special examination of Freddie Mac, in which the regulator recommended a capital surplus requirement and other measures to improve Freddie Mac’s accounting, management and disclosure practices.

“Freddie Mac remains well-capitalized and well-positioned to fulfill our mission, including responding appropriately to provide stability in the mortgage market,” said Richard Syron, Freddie Mac chairman and CEO.

“While OFHEO’s framework includes stringent monitoring and imposes restrictions on share repurchases, we do not expect it to adversely affect our disciplined growth strategy or require us to raise additional capital,” Syron added.

Freddie Mac also is taking remedial steps to improve its financial reporting and controls, including some elements of a Consent Order entered into by OFHEO and Freddie Mac in December.

***

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