Agencies’ ratings test

Freddie Mac and Fannie Mae, America’s two largest agency debt issuers, have now implemented the latest steps in their voluntary six-point programme agreed with Congress last year to reassure clients and the public of their safety and soundness.

The programme, announced in October 2000 at the urging of Representative Richard Baker, chairman of the House of Representatives’ agencies oversight subcommittee, comprised commitments to maintain more than three months’ liquidity, to implement a risk-based capital stress test, to disclose publicly the results of credit and interest rate risk-sensitivity analyses, to issue subordinated debt and to obtain an annual risk to the government rating from a recognized rating agency.