Sliding Into Fourth

In response to a request from its Inspector General, FHFA renewed the commitment to fourth-party supervision.  It now states that it will look even harder at GSE fourth-party risk management, assess trends in this sector, and take a look at rewriting current guidance to capture these exogeneous, but nontrivial, risks.   FHFA is hard-pressed to reach directly to fourth parties since it’s alone among major regulators with no authority to scrutinize third-party service providers.  However, it can and apparently will tell the GSEs to do more to reduce risks that come at them by way of subservicers, cyber-security providers, MI reinsurers, and other counterparties, affiliates, and vendors critical to GSE operations.  No timeline or specifics are provided.