The Federal Housing Finance Agency today announced it has revised a proposal to amend the Suspended Counterparty Program regulation and will repropose the rule, kicking off a second round of public comment and review.
The SCP requires FHFA’s regulated entities to submit a report to the agency if they become aware that an individual or institution with which they do business has been found to have committed certain forms of misconduct within the past three years. It also authorizes FHFA to direct those same entities to cease or refrain from doing business with certain counterparties. The agency proposed in July to expand the categories of “covered misconduct” under which a counterparty suspension could be based. In addition, it would be able to issue an immediate suspension order when the misconduct has resulted in debarment, suspension or limited denial of participation imposed by a federal agency.
The American Bankers Association and other financial industry groups expressed concerns about the proposal, saying the FHFA failed to explain why drastically expanding the program was necessary and why the program’s administration was not meeting relevant policy objectives. In a statement, the agency said it had made changes in response to public comments and will repropose the rule to allow further public review.
Specifically, the reproposed rule would authorize the suspension of business between a regulated entity and a counterparty whose misconduct resulted in a federal prohibition order or a civil money penalty above a specific threshold, according to the FHFA. It would also authorize the suspension of business between a regulated entity and a counterparty that has committed criminal or civil misconduct related to the management or ownership of real property.
“FHFA has carefully reviewed the feedback from stakeholders in developing this re-proposal, which will better ensure the regulated entities’ safety and soundness so they continue to serve as a reliable and stable source of liquidity for the U.S. housing finance system,” FHFA Director Sandra Thompson said.
