Statement By SEC Chairman:
On Fannie Mae/Freddie Mac
Chairman Harvey L. Pitt
U.S. Securities and Exchange Commission
SEC Headquarters, Washington, D.C.
July 12, 2002
I'm pleased to be participating in this landmark event on behalf of the Securities and Exchange Commission. Today, two companies that occupy a pivotal role in financing the American dream of affordable home ownership have agreed to subject themselves to the full panoply of SEC disclosure requirements from which they are otherwise exempt.
This initiative represents an effective partnership between government and the private sector, and I want to commend the Treasury Department, especially Secretary O'Neill and Undersecretary Peter Fisher, and OFHEO, and its Director, Armando Falcon, for helping us transform this initiative into a reality.
This agreement also reflects a commitment to the goals the President has called upon us to meet, and toward which we are all working: exemplary corporate governance, complete transparency of financial information and full and fair disclosure.
Although Fannie Mae's and Freddie Mac's decision to subject themselves to the full panoply of Securities Exchange Act disclosures is voluntary, it is now irrevocable without SEC approval. This addresses the concern that, however complete their disclosures were, it was strictly a matter of choice, not a requirement of law.
Fannie and Freddie will file, for example, complete, audited 10-K annual reports, 10-Q quarterly reports, and 8-Ks regarding current events affecting them. All of these reports will be subject to the same review and comment that our staff applies to all other publicly held companies. And, of course, we will have our full complement of enforcement authority over these periodic disclosures.
Similarly, the companies' officers and directors will file reports on their purchase or sale of company stock, and the companies' proxy statements will be subject to SEC staff review, as is true of all other public companies.
Together with Treasury and OFHEO, we will begin a study of disclosure requirements applicable to mortgage-backed securities. The goal is to ensure that the same standards of disclosure apply to all engaged in the distribution of these securities. But, this agreement does not subject the companies' securities to Securities Act registration requirements applicable to the public offering of new securities. We believe that the public is fully protected by the agreement announced today.
I commend Fannie Mae and Freddie Mac for this initiative. And we congratulate our sister agencies, Treasury and OFHEO, for their critical roles in making this initiative a reality. It is my hope and my belief that many other American companies will, in the interest of earning the confidence of the investing public, seek to do more than the law requires of them and to make their disclosures full, honest and understandable.