The following is an excerpt from a speech made by David W. Glenn, Vice Chairman and President, Freddie Mac

Every three seconds of every business day, Freddie Mac buys a home loan. Last year alone, we financed more than 2 million homes with mortgage-backed securities and corporate debt. The sheer volume of Freddie Mac's enormous financing responsibilities enables us to offer premium liquidity in all of the markets we serve.

Today, the size and liquidity of the mortgage-backed securities market is second only to the U.S. Treasury market for fixed-income investments. And outstanding Freddie Mac mortgage-backed securities total more than $750 billion.

In the debt markets, we've recognized and responded to a similar need for liquidity, given the recent decline in government-issued securities. In the decade ahead, the need for quality, liquid alternatives to government securities will become even greater. This rising global demand for quality, liquid debt complements Freddie Mac's need to expand our investment base.

Just two years ago, we sold less than 5 percent of our debt overseas. Today, we sell one-third of our marquis Reference Notes and Bonds to international investors. To date, Freddie Mac has issued $100 billion in Reference Notes and Bonds. This year alone, we've issued $26 billion, and we plan to issue over $30 billion more.

Our debt is known for worldwide dealer sponsorship, broad primary market distribution, and active secondary and repo markets, all of which enhance the liquidity of our high-volume issues.

Bringing a Tradition of Innovation to the Markets

Beyond liquidity, long-term success in financial markets also requires the ability to innovate and adapt to changing market conditions. At Freddie Mac, we have a long tradition of innovation.

We created the first conventional mortgage-backed security, which led to the development of the more general asset-backed market. We established the norms for documenting and underwriting home mortgages. More recently, we pioneered the new standard in automated underwriting, Freddie Mac's Loan Prospector. Our underwriting service, now accessible via the Internet, enables lenders to originate mortgages with less documentation, at a lower cost, and in a fraction of the previous time.

Innovation Also Drives Our Borrowing Strategies.

It was two years ago that we introduced our Reference Note program, offering triple-A-rated, two-, three-, five-, 10- and 30-year securities as an alternative to U.S. Treasuries.

And last summer, Freddie Mac announced the world's first corporate Financing Calendar. This innovation added predictability and transparency to our borrowing activities, and facilitated the development of term-repo, strips and futures markets ... another first for corporate debt.

In January, we launched a new program for short-term borrowing called Reference Bills. Per our calendar, we conduct regular, Internet-based auctions of these bills in maturities of one, two, three, six and 12 months. At the present time, we are the only major corporate supplier of a full yield curve of short-term debt. These past six months, we have issued over $300 billion in Reference Bills.

We have also introduced other features to make our top-quality corporate debt more like U.S. Treasuries. Of course, Freddie Mac's securities are not backed by the full faith and credit of the U.S. government. But our Reference products consistently offer transparency, liquidity and quality execution - three essential characteristics of bellwether debt instruments. The recent launch of futures contracts for Freddie Mac and Fannie Mae securities underscores the market's acceptance of our debt as a viable pricing and hedging alternative.

Technological innovation is as important to today's global markets as product innovation. Consequently, we have fully committed ourselves to provide state-of-the-art offerings and marketing capabilities via the Internet. On January 3, the first business day in the Year 2000, we became the first corporate borrower to use the Internet to augment traditional syndication practices.

As new opportunities emerge, Freddie Mac will continue to use technology to interact more effectively with dealers and an expanding group of investors.

There's an old German proverb that says, "Change, and change for the better, are two different things." Innovations that spring from new products, streamlined processes or emerging technologies are often the levers that trigger change for the better. And innovative businesses that continue to push those levers are in the best position to shape the future of evolving global markets.

Reliability That Stands the Test of Time

But we also understand the market's need for stability and reliability. That's why we honor our Financing Calendar obligations under all market conditions.

We also know the value of reliability to our public shareholders. Freddie Mac has consistently shown the ability to safely grow our business in good times and bad. We do this by carefully quantifying, controlling and diversifying all of the types of risk we face. Our conservative business practices, combined with sophisticated risk management, make Freddie Mac one of the world's strongest financial institutions. In fact, we hold enough capital to withstand 10 years of severe, adverse economic conditions.

Still, our size, growth and rising prominence in global markets have recently prompted questions about our safety and soundness, and about our relationship with the U.S. government.

Given our size, the size of the markets we serve, and the dramatic changes occurring in these markets, this attention is not unwarranted. In fact, we welcome our turn in the spotlight as an opportunity to re-confirm our indispensable role in financing the U.S. housing market safely and effectively.

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