Freddie Mac Chief Executive Richard Syron said the company is digging itself out of a "big hole" caused by last year's accounting scandal and related costs. He reiterated plans to report 2004 financial results by the end of the first quarter of 2005.

Syron Wednesday called Freddie Mac's (FRE: down $0.30 to $67.98) reporting lag an embarrassment, and he said the company would provide a timeline of its reporting plans in a Nov. 1 conference call. He spoke here at a Lehman Brothers Financial Services Conference that was Webcast.

The company reported earnings for all four quarters of 2003 on June 30. It said at the time that it would report earnings for each quarter of 2004 and the year as a whole by March 31, 2005. The delay is due to a complete overhaul of its accounting system.

General and administrative costs emanating from the accounting woes are "way too high," Syron said.

The company is extremely well capitalized, he maintained.

Freddie Mac exceeded its risk-based capital requirement of $7.13 billion by $27.77 billion at the end of the first quarter, its regulator said on June 30. This measures whether the company's capital sufficiently protects it against risks such as interest rate swings and falling home values.

The Office of Federal Housing Enterprise Oversight, Freddie Mac's federal regulator, early this year directed the company to hold 30 percent more than its minimum capital requirement until it sorts out its books.

"We are extremely well capitalized today, but until our financial reporting improves, we will operate under the 30 percent-surplus framework established by OFHEO," Syron said.

If there were to be a financial markets disturbance, Syron said he expected the company would be able to enter the markets to provide liquidity without incurring a penalty against that higher capital requirement.

Legislative efforts to create a stronger regulator for Freddie Mac, and fellow government-sponsored housing agencies Fannie Mae and the Federal Home Loan Banks, have withered, because the administration said proposals failed to give the new entity enough power.

Syron reiterated that he could have lived with the Senate's compromise legislation, which the Bush administration opposed as too weak.

The bill died this spring after a clash over how a failed enterprise would be handled. In the compromise bill, a failed agency could be placed by its regulator into receivership, but only after a congressional review period. Opponents of the plan said it could have heightened the market perception that the agencies have an implicit government guarantee, a notion which some in the government aim to dispel.

Separately, Syron reiterated the company's strong risk-management operations.

The company has "... invited people in from some of the most senior government entities -- I'll just leave it at that, people who are really expert -- to look at our derivative management, too say: 'Come inside, see how we do all this.' And I can tell you honestly they left a lot more comfortable about the job" that is being done under relatively new senior management, Syron said.

Freddie Mac was forced to restate earnings upward by $5 billion over the 2000-2002 period and earlier. The company replaced five senior executives and paid a $125 million fine to regulators.

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