Structured Finance Finds a Friend
As we noted, FHFA wasted no time after the PSPA revision with its proposed changes to GSE capital regulation. Although the changes seemed technical to many observers, the agency’s fact sheet makes clear that they are fundamental. Now, the GSE capital construct is predicated on CRT to move the money and thus preserve the capital, not on a capital raise to big-bank equivalents. FHFA says this makes the GSE regime equivalent to that for global systemically-important banks (GSIBs), but it still differs in key and often critical respects from the regime applicable to U.S. GSIBs. No matter, CRT is the new thing and faster GSE recapitalization is the certain result.
https://fedfin.com/wp-content/uploads/2021/09/GSE-091621.pdf