FHFA Proposes Rule Requiring GSE Resolution Planning

A new rule proposed by the Federal Housing Finance Agency today would require Fannie Mae and Freddie Mac to develop resolution plans to facilitate their rapid and orderly resolution in the event that the FHFA is appointed receiver. The proposal comes as part of the FHFA’s ongoing effort to develop a robust prudential regulatory framework for the GSEs.

In drafting the resolution plans, the GSEs would begin by identifying core business lines and developing and submitting a resolution plan that “provides strategic analysis and information to facilitate FHFA’s rapid and orderly resolution of the Enterprise in a receivership, including setting forth actions that an Enterprise would take to improve its resolvability and identified impediments to resolvability that may be beyond the Enterprise’s ability to address or control.”

FHFA would review the plans and provide notice of any deficiencies, as well as feedback on the timing of actions or changes to be undertaken by the GSEs. FHFA described the process as “an iterative one, involving episodic and periodic reviews (and updates as appropriate) of business lines, and periodic development of revised resolution plans.” Comments on the proposal are due 60 days after publication in the Federal Register.