Page 49 - September October 2018 Disruption Report Flip Book

FREDDIE MAC
SEJPATN.U-AORCYT.20210818
reported a 12% increase in its purchase volume. Freddie Mac’s single-family serious delinquency rates fell to their lowest levels in a decade to 0.73% on September 30, implying strong credit quality.
Since the Treasury Department placed Freddie Mac into conservatorship in the fall of 2008, the enterprise received $71.6 billion of capital assistance from the government and remitted dividend payments of $114.0 billion, providing Treasury a capital surplus of $42.4 billion.
“The third quarter marked another very good quarter for Freddie Mac, with comprehensive
income of $2.6 billion. This continues our growing quarterly track record of producing stable and strong earnings, all while responsibly supporting the company’s mission and reducing taxpayer exposure to our risks,” said Donald Layton, CEO, Freddie Mac. “As we look back on our 10 years in conservatorship, these results make clear that Freddie Mac is a transformed company that plays a key role in reforming and improving America’s housing finance system.” (Press Release, Freddie Mac, 10/31/18; DS News, Radhika Ojha, 10/31/18)
The GSEs cannot determine their destinies
Looking back on his tenure at Freddie Mac, CEO Donald Layton said:
The simple fact is Freddie Mac, the GSE system ...was not very competitive, not very commercial. It was very policy-driven, ex-government agency
style and I’m not an apologist for the old system. They did some good stuff, and they did some things that eroded confidence. They made themselves political issues because of the unlimited investment portfolios being used.
It became [in conservatorship], “Help build something that we can be proud of,” where you took the core value that you’re there for as a mission and operate it well. That’s what led to credit risk transfer, the capital system—all those things. That’s largely done. I have said this before: History books
like to declare eras. My era [beginning in 2012] was the era of: Make the companies work well in conservatorship. Prior to when I got there [2008- 2011], they were still dealing with the foreclosure crisis and were not able to focus on solutions at all. And the foreclosure crisis kind of peaked, and it’s still around, but the thought process was moving away. ...It was make quality companies that can do the job well.
...We do not determine [the GSEs’] destiny. We should be great technical advisers to everyone working on it and we should execute well, and that’s the role of the company. We’re not supposed to be in there lobbying for one solution or another. The only thing you’re supposed to be lobbying for is
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