March 12 (Bloomberg) -- Freddie Mac, the second-biggest U.S. mortgage-finance company, said it has sufficient reserves and won't cave in to requests by the Federal Reserve and U.S. Treasury to raise more capital at the expense of shareholders.

``This company will bow to no one,'' Chief Executive Officer Richard Syron said, responding to a question at a meeting with analysts today in New York. ``It's clear what our fiduciary responsibility is,'' Syron said, referring to shareholders.

Freddie Mac and larger competitor Fannie Mae are trading at the lowest in more than a decade on the New York Stock Exchange on concern that the government-chartered companies may need more capital amid losses from their portfolios and bond guarantees. Federal Reserve Chairman Ben Bernanke, in testimony last month to a U.S. House committee, urged the companies to bolster reserves.

``We have sufficient capital to continue to grow,'' Freddie Mac Chief Financial Officer Anthony Piszel told analysts today. ``There is no dilutive capital raise plan,'' he said.

On the heels of a record $2.45 billion fourth-quarter loss, some analysts say Freddie Mac may be forced to return to the equity market.

``The equity needs could be significant,'' Credit Suisse Group analysts led by Moshe Orenbuch wrote in a note this week. Orenbuch raised his loss estimate for McLean, Virginia-based Freddie Mac this year to $4 a share from an estimate of $2.25. Piszel reiterated that the company won't need to write down holdings of mortgage bonds whose values have tumbled.

Freddie Mac fell 12 cents to $20.04 today in New York Stock Exchange trading. Fannie Mae declined 96 cents to $21.04.

2008 Outlook

Freddie Mac's market value had plunged 67 percent to about $13 billion in the past year on concern that the company faces rising losses from foreclosures and falling debt prices and that any additional capital would dilute existing shareholder stakes. Freddie Mac sold $6 billion in preferred stock in November and cut its dividend in half.

Calling the current environment for single-family housing the equivalent of ``a 100-year storm,'' Freddie Mac executives today said credit expenses are still rising and the multifamily apartment-building market is also deteriorating.

``We have absorbed a little more than half'' of the expected losses in the housing decline, Syron said. ``We have seen only a third of the housing price decline that we expect.''

The company is raising fees and tightening its program requirements to curb losses. Freddie Mac's 2008 ``results should be better than '07's results, and by a good margin,'' Piszel said. The company reported a record $3.1 billion loss for 2007.

Plunging Value

Fannie Mae and Freddie Mac were created to boost financing for home loans. The companies, which account for 45 percent of the $11.5 trillion home loan market, profit by holding single- family and apartment-building mortgages and bonds as investments, and by charging fees to guarantee mortgage securities.

The inability to step up purchases of mortgages is inhibiting Freddie Mac's ability to help the U.S. weather the deepest housing slump since the Great Depression.

The company may record previously unrealized losses of more than $5 billion from drops in prices of subprime mortgage-bonds, the Credit Suisse analysts wrote this week.

Freddie Mac's auditors won't require writedowns on the securities unless the company can't convince them that the bonds will eventually pay off at face value, regardless of market prices or downgrades, Piszel said. So far, there are ``no points of contention'' with auditors on the issue, he said. An agreement Washington-based Fannie Mae has with the Office of Federal Housing Enterprise Oversight on similar accounting that takes into account ratings and trading levels doesn't affect Freddie Mac, he said in a later interview with reporters.

Piszel also dismissed suggestions that Freddie Mac will need to write off accumulated tax breaks, saying the company is reporting profits under tax accounting.

Capital Needs

The company is ``not out of the woods, far from it,'' Paul Mullings, a senior vice president for single family sourcing at Freddie Mac, told investors. ``Credit expenses are mounting.''

Piszel said credit provisions will be in the $3 billion to $4 billion range for 2008.

Freddie Mac began 2008 with $3.5 billion more capital than the requirement set by its regulator, Ofheo said yesterday. Ofheo requires Freddie Mac have an extra 30 percent capital cushion as it recovers from accounting missteps.

Syron told reporters the company will be ``in the market shortly, very shortly'' for a new chief executive, potentially enabling a split of the chairman and chief executive roles that Ofheo has said is part of what is needed to allow a return to normal requirements. Ofheo may ``take into consideration where we are in the process'' of separating the roles, he said.

Fannie Mae, the largest mortgage-finance company, last month posted a record net loss of $3.55 billion for the fourth quarter and, like Freddie Mac, increased its forecast for credit losses. Fannie Mae raised $7 billion in a preferred stock sale last year.

To contact the reporters for this story: Jody Shenn in New York at jshenn@bloomberg.net; James Tyson in Washington at jtyson@bloomberg.net.

Last Updated: March 12, 2008 16:12 EDT