Freddie Mac Initiates Monthly Interest-Rate Risk Sensitivity Disclosure

Implements Last of the Six Voluntary Commitments on Risk Management,

Capital and Disclosure Practices



Apr 18, 2001, 01:00 ET from Freddie Mac

    MCLEAN, Va., April 18 /PRNewswire/ -- Freddie Mac (NYSE:   FRE) today
 announced that it has introduced a monthly disclosure of its interest-rate
 risk sensitivity, meeting the last of the six voluntary commitments it made in
 October 2000 to enhance its risk management, capital, and disclosure
 practices. Implementation of all six commitments underscores Freddie Mac's
 financial capacity and risk management expertise.
     "Freddie Mac is defining the front lines of excellence in financial
 management practices," said Freddie Mac Chairman and CEO Leland C. Brendsel.
 "By implementing all six commitments in just six months, we leave no doubt
 about our capacity to finance housing for America's families for generations
 to come." Brendsel announced the enhanced disclosure during a speech today at
 the Exchequer Club in Washington, DC.
     In keeping with the pledge the corporation made last October in a joint
 announcement with House Financial Services Subcommittee Chairman Richard Baker
 (R-LA), Ranking Member Paul Kanjorski (D-PA) and other Subcommittee members,
 Freddie Mac will disclose its interest-rate sensitivity results on a monthly
 basis.  The disclosure will provide investors with additional information
 about Freddie Mac's risk profile more frequently than other financial
 institutions.
     This commitment exceeds supervisory guidance that the Board of Governors
 of the Federal Reserve Board and the Office of the Comptroller of the Currency
 issued in March for large banking organizations.  This guidance urged them to
 adopt the recommendation of a private sector working group on disclosure
 headed by former Chase Manhattan Bank chairman Walter Shipley that financial
 institutions should move from annual to quarterly disclosure of interest-rate
 risk.
     By initiating this enhanced monthly disclosure, Freddie Mac is going
 beyond the industry's best-practice standards.  "This disclosure demonstrates
 Freddie Mac's disciplined approach to managing interest-rate risk, which
 remains at low levels," Brendsel added.
     The monthly interest-rate risk disclosures show how immediate adverse
 changes in the level of Treasury rates and the slope of the Treasury yield
 curve would affect Freddie Mac's portfolio market value.  Specifically,
 
     *  The Portfolio Market Value Sensitivity Level (PMVS-L) is based on the
        impact of an immediate 50 basis point parallel shift in Treasury rates
        (up or down, whichever is more adverse). The March 2001 PMVS-L averaged
        3.54 percent, which was 0.08 percent higher than the February 2001
        average of 3.46 percent.
 
     *  The Portfolio Market Value Sensitivity Yield Curve (PMVS-YC) evaluates
        exposure to non-parallel shifts resulting from an immediate adverse 25
        basis point shift in the slope of the Treasury yield curve. The March
        2001 PMVS-YC averaged 1.40 percent, which was 0.19 percent higher than
        the February 2001 average of 1.21 percent.
 
     As of March 31, 2001, each one percent of PMVS-L and PMVS-YC equals a
 potential dollar loss of approximately $100 million.  The PMVS-L and PMVS-YC
 measure potential future losses only and not actual current losses to Freddie
 Mac.  (For more information on the new interest-rate risk disclosure, see
 http://www.freddiemac.com/six_commitments/interest_risk.htm )
     Additional information on Freddie Mac's implementation of the voluntary
 commitments can be found in the corporation's Information Statement dated
 March 26, 2001.
 
     Freddie Mac is a stockholder-owned corporation established by Congress in
 support of homeownership and rental housing.  Freddie Mac purchases single-
 family and multifamily residential mortgages and mortgage-related securities,
 which it finances primarily by issuing mortgage passthrough securities and
 debt instruments in the capital markets.  Over the years, Freddie Mac has
 opened doors for one in six homebuyers in America.
 
 

SOURCE Freddie Mac
    MCLEAN, Va., April 18 /PRNewswire/ -- Freddie Mac (NYSE:   FRE) today
 announced that it has introduced a monthly disclosure of its interest-rate
 risk sensitivity, meeting the last of the six voluntary commitments it made in
 October 2000 to enhance its risk management, capital, and disclosure
 practices. Implementation of all six commitments underscores Freddie Mac's
 financial capacity and risk management expertise.
     "Freddie Mac is defining the front lines of excellence in financial
 management practices," said Freddie Mac Chairman and CEO Leland C. Brendsel.
 "By implementing all six commitments in just six months, we leave no doubt
 about our capacity to finance housing for America's families for generations
 to come." Brendsel announced the enhanced disclosure during a speech today at
 the Exchequer Club in Washington, DC.
     In keeping with the pledge the corporation made last October in a joint
 announcement with House Financial Services Subcommittee Chairman Richard Baker
 (R-LA), Ranking Member Paul Kanjorski (D-PA) and other Subcommittee members,
 Freddie Mac will disclose its interest-rate sensitivity results on a monthly
 basis.  The disclosure will provide investors with additional information
 about Freddie Mac's risk profile more frequently than other financial
 institutions.
     This commitment exceeds supervisory guidance that the Board of Governors
 of the Federal Reserve Board and the Office of the Comptroller of the Currency
 issued in March for large banking organizations.  This guidance urged them to
 adopt the recommendation of a private sector working group on disclosure
 headed by former Chase Manhattan Bank chairman Walter Shipley that financial
 institutions should move from annual to quarterly disclosure of interest-rate
 risk.
     By initiating this enhanced monthly disclosure, Freddie Mac is going
 beyond the industry's best-practice standards.  "This disclosure demonstrates
 Freddie Mac's disciplined approach to managing interest-rate risk, which
 remains at low levels," Brendsel added.
     The monthly interest-rate risk disclosures show how immediate adverse
 changes in the level of Treasury rates and the slope of the Treasury yield
 curve would affect Freddie Mac's portfolio market value.  Specifically,
 
     *  The Portfolio Market Value Sensitivity Level (PMVS-L) is based on the
        impact of an immediate 50 basis point parallel shift in Treasury rates
        (up or down, whichever is more adverse). The March 2001 PMVS-L averaged
        3.54 percent, which was 0.08 percent higher than the February 2001
        average of 3.46 percent.
 
     *  The Portfolio Market Value Sensitivity Yield Curve (PMVS-YC) evaluates
        exposure to non-parallel shifts resulting from an immediate adverse 25
        basis point shift in the slope of the Treasury yield curve. The March
        2001 PMVS-YC averaged 1.40 percent, which was 0.19 percent higher than
        the February 2001 average of 1.21 percent.
 
     As of March 31, 2001, each one percent of PMVS-L and PMVS-YC equals a
 potential dollar loss of approximately $100 million.  The PMVS-L and PMVS-YC
 measure potential future losses only and not actual current losses to Freddie
 Mac.  (For more information on the new interest-rate risk disclosure, see
 http://www.freddiemac.com/six_commitments/interest_risk.htm )
     Additional information on Freddie Mac's implementation of the voluntary
 commitments can be found in the corporation's Information Statement dated
 March 26, 2001.
 
     Freddie Mac is a stockholder-owned corporation established by Congress in
 support of homeownership and rental housing.  Freddie Mac purchases single-
 family and multifamily residential mortgages and mortgage-related securities,
 which it finances primarily by issuing mortgage passthrough securities and
 debt instruments in the capital markets.  Over the years, Freddie Mac has
 opened doors for one in six homebuyers in America.
 
 SOURCE  Freddie Mac

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