The Federal Housing Finance Agency (FHFA) is seeking comments on a proposal that would implement a new framework for capital requirements for Fannie Mae and Freddie Mac and a revised minimum leverage capital requirement.
FHFA suspended regulatory capital requirements after it put Fannie and Freddie into conservatorships in September 2008 due to the recession.
“We think it is important for FHFA, as the prudential regulator for Fannie Mae and Freddie Mac, to articulate our views on capital requirements and to start a healthy discussion about the amount of capital the Enterprises should have to appropriately shield taxpayers from assistance,” FHFA Director Melvin Watt said. “In addition, feedback on this proposed rule will inform FHFA’s views as conservator in making possible refinements to our assumptions about capital as we evaluate the Enterprises’ business decisions during conservatorship.”
The proposed rule builds on FHFA’s work to develop a Conservatorship Capital Framework (CCF) for Fannie and Freddie. Despite their limited ability to hold capital under the Senior Preferred Stock Purchase Agreements (PSPAs), FHFA developed this aligned risk management framework to better inform the business decisions made by Fannie and Freddie while in conservatorship. FHFA also uses the CCF in its role as conservator to assess guarantee fees, activities, and operations and to protect Fannie and Freddie from making decisions that could adversely impact safety and soundness.
Interested parties can submit comments on the proposed rule via within 60 days of publication in the Federal Register via FHFA.gov.
FHFA will host a webinar on June 19 at 1:30 p.m. EDT to explain the proposed rule and answer questions.