In preparation to free Fannie Mae (OTCQB:FNMA) and Freddie Mac (OTCQB:FMCC) from U.S. government control, their regulator is proposing that the mortgage giants be required to hold a capital buffer of hundreds of billions of dollars, a move that could affect mortgage interest rates.
The Federal Housing Finance Agency re-proposed a rule that outlines how much capital that would have to retain against their assets as fully private companies.
Based on their September 2019 asset totals, the companies would have to have a combined total of ~$240B, Bloomberg reports.
The new proposal preserves the mortgage risk-sensitive framework of the 2018 proposal, while increasing the quantity and quality of the Enterprises’ regulatory capital and reducing the pro-cyclicality of the aggregate capital requirements, according to the FHFA statement.
“We must chart a course for the Enterprises toward a sound capital footing so they can help all Americans in times of stress,” said FHFA Director Mark Calabria. “More capital means a stronger foundation on which to weather crises.”
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