The Federal Housing Finance Agency (FHFA) has revised its proposal to amend the suspended counterparty program (SCP).
The SCP regulation requires entity to report to FHFA any misconduct by individuals or institutions that it does business. Further, it authorizes FHFA to order its regulated entities to cease doing business or refrain from entering into new business with certain counterparties.
The amended proposal would authorize the suspension of business between a regulated entity and a counterparty whose misconduct resulted in a federal prohibition order or a civil money penalty above a specific threshold. It would also authorize the suspension of business between a regulated entity and a counterparty that has committed criminal or civil misconduct related to the management or ownership of real property.
“Amending the Suspended Counterparty Program will help strengthen FHFA’s ability to protect its regulated entities from risks presented by other businesses that engage in misconduct,” FHFA Director Sandra Thompson said. “FHFA has carefully reviewed the feedback from stakeholders in developing this re-proposal, which will better ensure the regulated entities’ safety and soundness so they continue to serve as a reliable and stable source of liquidity for the U.S. housing finance system.”
FHFA is publishing this re-proposal after considering issues that commenters had raised about the original proposed rule. This includes distinguishing between misconduct that poses material risk to the safety and soundness of the regulated entities from behavior with de minimis impact.
FHFA invites comments on the re-proposed rule within 60 days of its publication in the Federal Register. Comments should be submitted electronically or via mail to the Federal Housing Finance Agency, Office of General Counsel, Attention: Comments/RIN 2590-AB23, 400 Seventh Street, SW, Washington, DC, 20219.