OCT-28-2003-TUE 03:09 PM F. 034 Question As we consider an independent regulatory structure within Treasury, I have looked at the examination budgets at OCC and OTS. I understand those bank regulatory agencies spend around 2/3rds of their budget on pure examination staffs. What percentage of your budget goes toward examination? Answer OFHEO 's allocation of resources to the direct supervision of Fannie Mae and Freddie Mac is comparable to the resources that the OCC and OTS allocate to supervising the financial institutions that they regulate. Information contained in each agency's FY 2003 Performance Plan facilitates a direct comparison. OFHEO allocated 87% of its FY 2003 budget on the direct supervision of Fannie Mae and Freddie Mac. OFHEO's FY 2003 Performance Plan allocates resources to three Strategic goals: 1) Ensure the Enterprises comply with safety and soundness standards and are adequately capitalized, 2) Enhance public understanding of the nation's housing finance system, and 3) Contribute to Federal efforts to promote efficient and effective financial markets and homeownership. Strategic Goal 1 encompasses all of OFHEO's efforts in the direct supervision of the Enterprises. The OCC's FY 2003 Performance Plan allocates the agency's resources to four program activities (Supervise, Charter, Regulate, and Analyze Risk). The Supervise program arca includes all activities that relate to the ongoing supervision of individual national banks, including activities to ensure capital adequacy. The OCC allocated 84% of its FY 2003 budget for this activity. The OTS's FY 2003 Performance Plan allocates the agency's resources to the accomplishment of four strategic goals: 1) A safe and sound thrift industry, 2) A flexible regulatory framework...., 3) Fair access to financial services, and 4) A motivated and expert workforce. The strategic goal of ensuring a safe and sound thrift industry (Strategic Goal 1) includes all activities that relate to the ongoing supervision of individual thrifts, including activities to ensure capital adequacy. The OTS allocated 86% of its FY 2003 budget to achieve this goal. OUT-28-2003-TUE 03:09 PM P. 035 Source: OTS' FY 2003 Performance Plan Total budget is $157,700,000 10/22/2003 Fair Access $3,200,000, 2% Workforce $1,600,000, 1% 164 264 P. 036 OUT-28-2003-TUE 03:10 PM Source: OCC's FY 2003 Budget/Performance Plan Total budget is $438,508,000 10/22/2003 Charter $14,501,000,3% Regulate $32,232,000, 7% Analyze Risk $21,754,000, 5% OCT-28-2003-TUE 03:10 PM P. 037 Source: OFHEO's FY 2003 Performance Plan Total budget is $30.800,000 10/22/2003 Promote Efficient Financial Markets $700,000, 2% Responses to Questions for the Record From Congresswoman Brown-Waite Presiding Director, Freddie Mac Q. The news that your restatement of financials will again be delayed is considerably troubling. As I see it, you cannot comply with Bush Administration's request with the 1934 S.E.C. Act until you file audited financials. Is that correct? A.. Freddie Mac will not be able to complete its voluntary agreement to register under the 1934 Act until it has resumed timely reporting. The company's objective is to release quarterly and full-year 2003 results by June 30, 2004 and to provide its 2003 annual report and hold its related stockholders' meeting as soon as practicable thereafter. The company's objective is to return to timely reporting as soon as practicable after its release of 2003 results. The company remains committed to completing voluntary 1934 Act common stock registration with the Securities and Exchange Commission ("SEC"), with the objective of completing the process as soon as possible after the company's return to timely reporting. Q. Does that also mean that you are not currently bound by the terms of SarbanesOxley? A. Freddie Mac will be fully subject to the Sarbanes-Oxley Act when it completes its voluntary common stock registration with the SEC under the Securities and Exchange Act of 1934. However, Freddie Mac already is in the process of implementing policies and procedures to become fully compliant with the Sarbanes-Oxley Act. Freddie Mac also has implemented a corporate-wide employee-training program for its 4,300 employees on the provisions of Sarbanes-Oxley and the company's Code of Conduct, which has been completed by 98.5% of its employees Q. When you submit audited financials, now in October, will that be for 2000, 2001, and 2002? Where do you stand with the first two quarters of 2003? A. On November 21, 2003, the company announced the results of its restatement of previously issued consolidated financial statements for the years 2000 and 2001 and the first three quarters of 2002 and the revision of fourth quarter and full-year consolidated financial statements for 2002. The company expects to provide its 2002 annual report and hold its related annual stockholders' meeting in |