Federal Housing Finance Authority Follows BDA Recommendation for Agency Capital Requirement

Today, the Federal Housing Finance Authority (FHFA) released a proposal setting capital requirements for Fannie Mae and Freddie Mac in an effort to move the agenciesout of federal government control. The release follows BDA recommendations that agencies should be allowed to retain profits to grow capital.

*The BDA GSE White Paper can be viewed here.

The proposed rule would require Fannie and Freddie to retain capital equivalent to 4 percent of their assets under normal economic conditions, meaning the two companies combined would have to hold a little over $240 billion to support their $6.1 trillion in combined assets. The companies together currently hold about $23.5 billion in capital.

The BDA will continue to review the proposal, and will provide updates including a potential call to discuss additional comments in response to the proposal.

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