Because deposits at the Federal Reserve don’t earn interest, FHLBanks’ use of IBDAs at large banks with high credit has expanded over the last few years. FHFA wants to give those deposits a capital treatment equivalent to that given to overnight Fed funds sales.
Researchers say strategic securitization by lenders exposes the GSEs to higher insurer counterparty risk, especially in regions with frequent climate-related disasters. The proposed cure: LLPAs and capital rules that compensate the GSEs for this risk.
The Federal Housing Finance Agency last week joined the OCC, FDIC and NCUA in reproposing a rule that will prohibit incentive-based compensation agreements.
The Federal Reserve published a hypothetical economic collapse for banks to use in their annual stress test this year. The same scenario might be used by FHFA for Fannie Mae and Freddie Mac.
Freddie and lender trade groups circled the wagons in opposition to many of the mortgage-related provisions in a proposed rule to change capital requirements for large banks.
The creation of a U.S. sovereign wealth fund could grease the skids for an end to the conservatorships of Fannie Mae and Freddie Mac.
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