Newsroom

The Federal Housing Finance Agency (FHFA) will hold two public listening sessions – Sept. 10 and Sept. 14 – to gather additional feedback on its proposed rule to set capital requirements for the government-sponsored enterprises (GSEs). NAFCU was generally supportive of the proposal when it was originally issued last year, but continues to advocate that certain safeguards are codified by Congress before removing the GSEs from conservatorship.

Registration for the sessions is available here. Those interested in speaking during the events are also able to request a speaking slot during the registration process.

While the original proposal maintained the "foundation" of the update – released in May – the FHFA's enhancements have three primary objectives:

• preserve the mortgage risk-sensitive framework of the 2018 proposal, with simplifications and refinements;
• increase the quantity and quality of the regulatory capital of the GSEs to ensure that, during and after conservatorship, each GSE operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle; and
• address the pro-cyclicality of the risk-based capital requirements of the 2018 proposal, also in furtherance of the safety and soundness of the Enterprises and their countercyclical mission.

Of note, the rule requires the GSEs to maintain the following risk-based capital levels:

• total capital not less than 8 percent of risk-weighted assets, determined as further described in the rule;
• adjusted total capital not less than 8 percent of risk-weighted assets;
• tier 1 capital not less than 6 percent of risk-weighted assets; and
• common equity tier 1 (CET1) capital not less than 4.5 percent of risk-weighted assets.

In addition, the GSEs would be required to satisfy the following leverage ratios:

• core capital not less than 2.5 percent of adjusted total assets; and
• tier 1 capital not less than 2.5 percent of adjusted total assets.

The rule also stipulates that Fannie Mae and Freddie Mac must cumulatively hold over $240 billion in capital, which would reduce their leverage from its current 250-to-1 to 25-to-1. Following the release of housing finance reform plans last year, the FHFA and Treasury Department reached an agreement to allow the GSEs to start rebuilding capital.

Comment letters on the re-proposed rule must be submitted by today.