FHFA reissues capital proposal for Fannie, Freddie

May 21, 2020

The Federal Housing Finance Agency reissued a proposed rule to establish a new regulatory capital framework for Fannie Mae and Freddie Mac that would require the government-sponsored enterprises to hold a combined $240 billion in capital after they are released from conservatorship.

The FHFA said the proposed rule is based on the agency's 2018 capital plan and preserves its mortgage risk-sensitive framework while increasing the quantity and quality of required capital. The FHFA suspended regulatory capital requirements on Fannie and Freddie after placing them into conservatorships in September 2008.

In its November 2018 comment letter on the original proposal, ICBA advocated implementing the plan with higher capital standards on par with those required of the Federal Home Loan Banks. In December 2019, ICBA and other groups urged the FHFA to quickly re-propose and finalize the rule after the agency announced plans to reissue it.

Separately, the FHFA and Treasury Department last fall announced an ICBA-supported plan allowing the GSEs to retain a combined $45 billion in capital.

ICBA has repeatedly called on policymakers to wind down the GSE conservatorships and end the net-worth sweep of their earnings into government coffers, as detailed in ICBA’s Principles for GSE Reform white paper and required by the Housing and Economic Recovery Act.

 

The FHFA said it will soon hold a public webinar on the proposed rule, which will have a 60-day comment period. ICBA is reviewing the proposal and will provide comments.