ABA Urges FHFA to Refine Proposed Amendments to GSE Capital Framework

In a comment letter today, the American Bankers Association urged the Federal Housing Finance Agency to further refine proposed amendments to the capital framework for Fannie Mae and Freddie Mac relating to the prescribed leverage buffer amount and credit risk transfers.

The association told FHFA that current proposals to revise and refine the PLBA and CRT are important steps but need “further refinement, supported by additional research, and the development of metrics to better determine the degree to which tools such as CRT should be deployed.”

ABA emphasized that reducing the risks held by Fannie and Freddie—during the ongoing conservatorship and post-conservatorship—is one of FHFA’s most important responsibilities. The association acknowledged that reducing the GSE risks is complex, due to uncertainty around what form the enterprises take in a post-conservatorship environment but said that it remains neutral about the post-conservatorship corporate structure of the enterprises.