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Consent Order Issued in Action Against Former Freddie Mac Chairman and CEO Leland C. Brendsel

November 9, 2007

Washington, DC - OFHEO Director James B. Lockhart issued a Consent Order against former Freddie Mac Board Chairman and Chief Executive Officer (CEO) Leland C. Brendsel that settles OFHEO's administrative enforcement action against him.

"OFHEO's responsibility to address the safe and sound operations of the Enterprises includes assuring that corporate leadership focuses on all aspects of corporate operations, particularly those that set a tone for an entire company," said Lockhart. "While the Consent Order today represents a satisfactory conclusion to the enforcement actions arising from matters addressed in OFHEO's special examination of Freddie Mac, we continue to monitor the Enterprise's ongoing remediation."

Mr. Brendsel consented to the Order in settlement of an OFHEO administrative Notice of Charges filed against him on December 17, 2003 (and subsequently amended). The administrative action alleged that Mr. Brendsel, among other things, established a corporate culture that allowed improper earnings management to develop, failed to ensure that adequate internal controls were put in place and permitted the accounting function to operate without adequate resources. The charges concluded that such allegations represented misconduct and unsafe and unsound practices that led to the losses suffered by Freddie Mac.

The Notice of Charges sought an order to cease and desist, civil money penalties, disgorgement, reimbursement and other relief. In satisfaction of the Notice of Charges, the Consent Order places several requirements upon Mr. Brendsel-

  • Payment of $2.5 million to the United States government.
  • Disgorgement of previously paid salary and bonuses of $10.5 million to Freddie Mac.
  • Waiver of claims against Freddie Mac for additional compensation, valued at more than $3.4 million.
  • No future employment of Mr. Brendsel by Freddie Mac without OFHEO permission.
  • The Consent Order provides that funds disgorged to Freddie Mac will be used to support initiatives and programs that seek to keep distressed homeowners in their homes, subject to OFHEO approval.
The Consent Order concludes OFHEO's proceedings against Mr. Brendsel, currently before United States Administrative Law Judge William B. Moran, which commenced on October 15, 2007.

OFHEO previously entered into a consent order with Freddie Mac that entailed a restructuring of the company, major remediation of controls, extensive changes in accounting policies and corporate governance, building of a new information technology infrastructure and a $125 million civil money penalty. Also, OFHEO previously entered into consent orders with former President and Chief Operating Officer David Glenn and with former Chief Financial Officer Vaughn Clarke, both of which orders included a civil money penalty of $125,000.

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