Letter to Freddie Employees: "Treasury Department Reaffirms Support for GSE Model, Mission"

I received an e-mail that contains the text of a letter allegedly sent to Freddie Mac employees this evening (hat tip reader Jeff). On the one hand, I cannot verify its authenticity. On the other hand, it reads like the real deal.

Note particularly the claim that the measures proposed by the Treasury are merely “backstop options” and that the GSE is “adequately capitalized and our liquidity position is strong”:

We’ve put a very tough week behind us – a week in which all of us read or heard a lot of speculation about Freddie Mac and its future. Much of the conjecture was overheated and simply inaccurate, but the amount of coverage reflects the current market challenges and the GSEs’ critical role in supporting the nation’s homebuyers and renters.

Today, the Treasury Department, in conjunction with the Federal Reserve, made an important announcement reaffirming the administration’s support of the GSE model and mission. We appreciate both their words and their willingness to stand behind the GSEs. What the markets need most right now is certainty; the Treasury Department is helping to provide it by proposing legislative changes that would allow the agency – should circumstances warrant – to temporarily extend our credit line and/or make equity investments in the company.

I want to stress that these are simply backstop options as we move forward. We said last week that Freddie Mac is adequately capitalized and our liquidity position is strong. That remains absolutely true. And as we’ve told investors, we expect this year to be better than last. But should the need arise, the Treasury Department’s contingency plan provides an additional resource to which we can turn.

There’s no question this will be another difficult week. But I want to assure you that our board and senior management team are taking the necessary steps to get us through it. Let’s not lose sight of the fact that we’ve made tremendous progress, and let’s not be distracted from the important work that remains. SEC registration is a top company priority. We’re tackling our credit-related issues, proceeding with needed infrastructure improvements, and making appropriate pricing changes. We’ll be raising additional capital when it makes sense for us to do so. We are continuing to reach out and support our customers in creative ways.

In other words, we’re continuing to fulfill our core mission by providing liquidity, stability, and affordability to the U.S. housing
finance system at a time when we’re desperately needed. That we’re doing so amidst such a flurry of potential distractions is a testament to all of you. Thank you for keeping your focus. I’ll stay in touch with you as developments arise.

Dick Syron

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