ABA Supports Proposed Rule Enhancing Approval Process Transparency For GSE Products

The American Bankers Association submitted a comment letter today supporting a proposed rule by the Federal Housing Finance Agency on the process of approving GSE enterprise products. The association welcomed the FHFA’s effort to bring greater transparency and objectivity to the approval process for new products offered by the GSEs.

ABA recommended some changes to the rule, noting that “before finalizing, we strongly encourage FHFA to propose more detailed criteria about how new activities/products will be evaluated, and allow further public comment on them.” The association acknowledged that allowing for more time for public comment will delay the implementation of a new rule, “but doing so will ensure that regulation and evaluation of the GSEs’ products are not subject to changing political views of the GSEs or their role in the secondary market.”

The association also recommended that FHFA consider establishing numerical thresholds when evaluating safety and soundness risk posed by a new activity and establishing a list of questions to evaluate the product to provide a baseline “to ensure more consistent and objective evaluation of the public interest regardless of who is director of the FHFA.”