Low credit risk profile Government-sponsored enterprise (GSE) charter allows favored status of debt securities in the capital markets Long track record of managing and mitigating interest rate risk Regulatory requirement for 30% capital surplus bolsters otherwise thin minimum statutory capital requirement Business concentration in residential mortgage loans Inherent exposures to interest rate risk since core assets are longer term, fixed-rate mortgage loans GAAP earnings volatility related to accounting for derivatives and guarantee business Freddie Mac's core asset-quality metrics are quite strong. Serious delinquencies are rising, but are still at the low level of 51 basis points (bps). Likewise, net credit losses remain quite low at 2.2 bps. The sizable loan-loss provision has significantly increased Freddie Mac's reserve position, which is
