With policymakers focused on ending Fannie Mae and Freddie Mac’s conservatorship, their regulator is reorganizing key units and adding staff to position itself for the long term.
The regulator said the investment bank and financial services company will help in the process of strengthening Fannie Mae and Freddie Mac’s capital standing for their eventual exit from conservatorship.
The central bank is aiming to finish a rule creating a streamlined capital buffer ahead of the upcoming round of stress testing, but industry experts say that timeline may be too ambitious.
Federal Housing Finance Agency Director Mark Calabria discussed the possibility of having Fannie Mae and Freddie Mac operate under a consent order to allow the government-sponsored enterprises to be able to raise capital.
The 10 largest publicly traded euro-area lenders will see their capital requirements stabilize in 2020 after years of increases, according to recent filings. That may create space for higher dividends and buybacks, bolstering banking stocks.
A risk-based capital rule for Fannie Mae and Freddie Mac is expected to top the agenda in 2020 as the companies’ regulator executes plans for their release into the private sector.
Sen. Elizabeth Warren’s proposal to subject bank deals to greater public scrutiny should instead be addressed through reforms to the Community Reinvestment Act.
The central bank gave the seven banks passing grades on their stress tests but said that they will need to start holding more high-quality capital to guard against a potential economic downturn.
Lawmakers blasted an apparent decision by the OCC and FDIC to move forward with a proposal to reform the Community Reinvestment Act without the support of the Fed.
