#UMBS – Federal Financial Analytics

27 11, 2023

GSE-112723

Eliza Allen2023-11-27T11:49:59-05:00November 27th, 2023|4- GSE Activity Report|

An Advanced View of Regulatory Capital?

The most significant thing in FHFA’s final capital rule is not what is to be done, but what FHFA left out: ending the GSEs’ advanced-approach requirement. As a result, Fannie and Freddie can still use models for key calculations, a requirement that makes more sense for two complex organizations than it did for the regional banks also long subject to advanced-approach requirements even though the rules required them, like GSIBs, to hold the higher of the standardized or advanced approach.

GSE-112723.pdf…

13 03, 2023

DAILY031323

Eliza Allen2023-03-13T17:25:04-04:00March 13th, 2023|2- Daily Briefing|

Biden Promises Regulatory Revamp

In an effort to restore confidence in the banking system, President Biden announced that he will ask Congress and the banking regulators to strengthen regulations that were rolled back by the Trump administration.

Political Battle Lines Take Shape

In the wake of yesterday’s decision to protect all SVB depositors, Members of Congress are now positioning themselves for future action.

Biden Presses Stability in Wake of SVB, Signature Rescues

Reflecting ongoing uncertainties and political fallout, President Biden later this morning reiterated comments from earlier today noted in our prior alert.

Comment Deadline Set for GSE Capital Proposal

The Federal Register today includes the FHFA’s proposal to refine Fannie and Freddie’s capital construct.

Fed Tries to Get Ahead of SVB Storm

Even as Sen. Hagerty (R-TN) led calls to review Fed supervision, the Fed today announced that Vice Chair Barr will lead a review of SVB’s supervision and regulation.

Daily031323.pdf…

23 02, 2023

DAILY022323

Eliza Allen2023-02-23T16:48:42-05:00February 23rd, 2023|2- Daily Briefing|

Agencies Strengthen Defenses vs. Crypto-Related Funding

As FedFin forecast when significant bank crypto-related deposit exposures came to light (see Client Report CRYPTO38), the banking agencies today issued guidance telling banks to monitor and mitigate risks related to resulting liquidity risk.

FSB Sets Out Key Cross-Border Payments Action Items

The Financial Stability Board today released a list of actions for implementing the G20’s Roadmap for Enhancing Cross-border Payments, including three priorities. These are payment system interoperability and extension; legal, regulatory and supervisory finalizing frameworks; and cross-border data exchange and message standards.

IMF Presses CBDC, New “Unified Ledger”

A new IMF blog post advocates for public sector implementation of new payment technologies including tokenization, encryption, and programmability to improve cross-border payments, limit counterparty risk, and facilitate AML and other compliance.

FHFA Proposes GSE-Capital Revamp

FHFA today sought comment on several significant revisions to the regulatory-capital rules governing Fannie and Freddie. As we will detail in a forthcoming in-depth report, several of these changes concede to comments rejected as the current rules were finalized.

Daily022323.pdf…

1 07, 2022

GSE-070122

Eliza Allen2023-01-24T15:51:09-05:00July 1st, 2022|4- GSE Activity Report|

Plan B for UMBS?

FHFA today essentially conceded after its initial polite rebuff to an Urban Institute critique of the capital rules adverse impact on UMBS. In a statement, the agency now says that continuing consultation with stakeholders persuades it that something must be done to protect the single security. Although the GSEs will for now continue to charge their add-on guarantee fee, FHFA pledges a “near-term” review of the capital rule’s requirements, emphasizing its continuing commitment to listen to concerns. In short, stand by for a bit of a capital rewrite unless FHFA comes up with Plan B. We can’t think of what this might be other than a capital fix since the problem here is market perception, not GSE behavior, but FHFA is committed to its capital rule and will try something else if it can think of something else.

GSE-070122.pdf…

23 06, 2022

GSE-062322

Arezou Rafikian2023-01-25T15:52:27-05:00June 23rd, 2022|4- GSE Activity Report|

No Oops re UMBS

Following a sharp critique of GSE capital standards earlier today from the Urban Institute, FHFA Director Thompson today acknowledged Fannie and Freddie’s new 50 bps fees when one of the GSEs guarantees the other’s collateral for UMBS purposes. The Urban Institute paper argued that these fees properly reflect the capital cost of the rules’ weightings related to these cross-guarantees, going on to say that the fees are likely over time to reduce investor appetite for Freddie Mac securities and thus undermine the UMBS construct and its broader benefits.

GSE-062322.pdf…