As we reiterated last week, FHFA Director Calabria’s capital calculations will determine IPO feasibility or the viability of other conservatorship-exit strategies if he and the Administration stick to the commitment that successor institutions meet bank-like capital standards.  Even so, the capital calculation could be just a nominal one based on the final version of FHFA’s pending capital rewrite, but a more robust, forward-looking approach with an eye to political risk would also include stress-tested resilience.  A new blog post from the Bank Policy Institute (BPI) shows just how far Fannie and Freddie have to go under anything like CCAR. The blog post also points to significant challenges for private MI versus capital-market structured risk transfers.

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