Syron: OFHEO May Limit Portfolio

The Office of Federal Housing Enterprise Oversight could impose portfolio limits on Freddie Mac, the company's chairman has warned investors, potentially placing Freddie in the same boat as Fannie Mae until it improves its internal controls and financial reporting systems.The new acting OFHEO director, James Lockhart, recently placed a freeze on the size of Fannie Mae's portfolio until the government-sponsored enterprise fixes its control and accounting systems. "Director Lockhart has indicated that he intends to consider whether additional remedial action may be appropriately applied to Freddie Mac while we continue to fix our control environment," Freddie chairman and chief executive Richard Syron told an investor teleconference on the release of its 2005 annual report Tuesday evening. "And this could include consideration of portfolio growth limitations for some period of time." Mr. Syron stressed that fixing the internal control and accounting infrastructure "is our highest and most urgent priority." Freddie hopes to complete the testing of its system improvements by year-end. But the GSE does not expect to begin timely reporting of quarterly financial results until the release of its 2006 annual report.