WASHINGTON—The Federal Housing Finance Agency will hold two public listening sessions – Sept. 10 and Sept. 14, respectively, to gather additional feedback on its proposed rule to set capital requirements for the government-sponsored enterprises (GSEs).
While the original proposal maintained the "foundation" of the update – released in May – NAFCU noted 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
- 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
Risk-Based Capital Levels
The rule, NAFCU noted, also requires the GSEs to maintain the following risk-based capital levels:
- Total capital not less than 8% of risk-weighted assets, determined as further described in the rule
- Adjusted total capital not less than 8% of risk-weighted assets
- Tier 1 capital not less than 6% of risk-weighted assets
- Common equity tier 1 (CET1) capital not less than 4.5% of risk-weighted assets
In addition, the GSEs would be required to satisfy the following leverage ratios:
- Core capital not less than 2.5% of adjusted total assets
- Tier 1 capital not less than 2.5% of adjusted total assets
Other Stipulations
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.
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.