#Fannie – Federal Financial Analytics

20 09, 2023

GSE-092023

Eliza Allen2023-09-20T09:32:14-04:00September 20th, 2023|4- GSE Activity Report|

It’s Not Over…

Or maybe it is, but not everyone has heard. Earlier this week, Rep. Andrew Ogles (R-TN) introduced H. R. 5549 to require Treasury to give Congress a complete plan to end the GSEs’ conservatorship. Our forecast: don’t wait up. Our observation: it’s interesting that a conservative freshman hasn’t given up even though there’s no sign that his leadership has any interest reviving this idea. This is far too early and far too little to suggest a leading indicator to renewed Republican interest in tackling the GSEs now that Pat Toomey is gone from the Senate, but it’s noteworthy nonetheless.

GSE-092023.pdf…

11 08, 2023

Al081423

Eliza Allen2023-08-11T16:27:33-04:00August 11th, 2023|3- This Week|

The Capital Construct Continued

Even as we stay on watch for new regional-bank resolution rules, and keep you posted on some high-impact events (see below), we’ve been plowing through hundreds of pages of regulatory-capital rewrites. Last week, we built on our in-depth analyses of the overall capital framework (see FSM Report CAPITAL230) and the new approach to credit risk (see FSM Report CAPITAL231) with several new in-depth assessments.

Al081423.pdf…

10 08, 2023

FedFin on: 9th Inning Results

Arezou Rafikian2023-08-11T16:25:22-04:00August 10th, 2023|The Vault|

FHFA today released the results of the ninth stress test it’s run on Fannie and Freddie since Dodd-Frank demanded this in 2010. Using pretty much the same flawed models as the Fed, FHFA finds Fannie and Freddie pretty much as they are even under acute stress.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.…

10 08, 2023

GSE-081023

William Cross2023-08-10T16:41:31-04:00August 10th, 2023|4- GSE Activity Report|

9^th Inning Results

FHFA today released the results of the ninth stress test it’s run on Fannie and Freddie since Dodd-Frank demanded this in 2010. Using pretty much the same flawed models as the Fed, FHFA finds Fannie and Freddie pretty much as they are even under acute stress.

GSE-081023.pdf…

8 08, 2023

FedFin on: Say It’s Simple

Arezou Rafikian2023-08-09T14:19:41-04:00August 8th, 2023|The Vault|

Our most recent analysis of the inter-agency capital proposal focuses on significant changes to the rules for securitization and credit-risk transfer positions. In short, super-traditional securitizations have an easier path to the secondary market, but GSEs still beat banks. Complex ABS face often-formidable obstacles, as does CRT given or taken by banks.

The full report is available to subscription clients. To find out how you can sign up for the service, click here.…

8 08, 2023

GSE-080823

Eliza Allen2023-08-08T13:46:46-04:00August 8th, 2023|4- GSE Activity Report|

Say It’s Simple

Our most recent analysis of the inter-agency capital proposal focuses on significant changes to the rules for securitization and credit-risk transfer positions. In short, super-traditional securitizations have an easier path to the secondary market, but GSEs still beat banks. Complex ABS face often-formidable obstacles, as does CRT given or taken by banks.

GSE080823.pdf…

4 08, 2023

Al080723

Eliza Allen2023-08-04T16:31:21-04:00August 4th, 2023|3- This Week|

A Crushing Capital Burden

No, we’re not talking about the proposals – enormous, complex, and in some cases ill-drafted and confusing though they are. We’re talking about how much work it’s taking to go beyond the top-line analyses and section-by-section repeats we’re seeing in so many releases to give you in-depth, strategy, and market-focused analyses of what key parts of the rules say and how they’ll redefine banking as we and the financial system know it. There’s much not to love about the current construct, but the complexity of the new capital framework makes it stunningly difficult not just for us, but we fear also for the regulators, to know if the new framework will prove a Frankenstein. When we finish our read of all the proposals’ sections and that for GSIBs, we’ll release a final, bottom-line strategic conclusion. Until then, it’s critical to understand each key part of the rule and how it defines individual business lines and the markets that depend on them.

Al080723.pdf…

28 07, 2023

DAILY072823

Eliza Allen2023-07-28T17:09:55-04:00July 28th, 2023|2- Daily Briefing|

FSOC Considers Nonbank Systemic Risk, Credit-Based LIBOR Replacements

At today’s FSOC meeting, participants as usual said nothing about the closed-door agenda, which notably featured more discussion of the systemic risk that may be posed by nonbank mortgage servicers. Different agencies presented their work to address this risk, which was also flagged when FSOC finalized its new approach to identifying systemic risk (see FSM Report SYSTEMIC95). Whether FSOC as a whole is satisfied with FHFA and Ginnie actions and even if these agencies think their work to date suffices will determine the extent to which FSOC intervenes, but the session reinforced the systemic importance accorded to nonbank mortgage firms and the potential for additional action.

Agencies Take Action to Enhance Emergency Liquidity, Whitewash Discount Window

As presaged at Chair Powell’s press conference earlier this week, the banking agencies today issued liquidity-planning guidance designed both to ensure adequate preparation for acute liquidity stress and take the stigma off discount-window draws. The guidance deals only with liquidity planning and thus does not alter the treatment of discount-window funding for purposes of the LCR, admonishing banks to take account of the hard lessons of the March bank failures and prepare for runs and other extreme-stress scenarios.

Daily072823.pdf…

3 07, 2023

DAILY070323

Eliza Allen2023-07-03T16:12:30-04:00July 3rd, 2023|2- Daily Briefing|

UK Targets PE/Private-Credit Interconnections

Although U.S. regulators have begun to talk about inter-connections (see FSM Report SYSTEMIC95), the Bank of England’s top official for international finance today laid out new U.K. policy to address them. Specifically, Nathanaël Benjamin addressed counterparty risk with particular attention to bank private-equity and private-credit exposures. Mr. Benjamin’s concern is principally that, should the U.S. not pull off a soft landing, this sector could experience severe stress that could quickly migrate to asset management.

IOSCO Sticks With SOFR

Acting on concerns often expressed by SEC Chairman Gensler, IOSCO today published its final assessment of USD LIBOR, judging two credit-sensitive alternatives problematic and blessing limited use of certain term SOFRs. The most immediate consequences of this will be to make the Fed still less likely to permit banks to use the limited credit-sensitive exemptions provided in its final alternative-benchmark rule (see FSM Report LIBOR9), with IOSCO emphasizing its point with specific reference to this option by urging only cautious use of these rates and suggesting that regulators (presumably outside the U.S.) review their permissibility.

Daily070323.pdf…

30 06, 2023

GSE-063023

Eliza Allen2023-06-30T11:00:43-04:00June 30th, 2023|4- GSE Activity Report|

The Ides of IRR

In non-public remarks ahead of a presentation by FedFin managing partner Karen Petrou, Sen. Jack Reed (D-RI) laid out what he thinks banking agencies will do next, doubtless based on what they’ve told him that they’ll do next. We have predicted that new interest-rate risk (IRR) standards are high odds, but Reed’s comments suggest they are a near-term for-sure.

GSE-063023.pdf…