Models using the most likely assumptions about retained earnings, capital requirements and expected returns suggest the GSEs would have unsuccessful public offerings.

The improved financial performance of the GSEs largely reflects the impact of CECL. The provisions for losses that would have been made in 2Q20 under the old accounting standard were already accounted for by CECL, which was adopted in December. (Includes data chart.)

Most of the concerns about the new regulation hinge on how much profit the GSEs can make under the bumped-up capital levels. Most industry observers appear to be on the side of “not enough.”

The platform is used to estimate the future performance of the loans owned or guaranteed by Fannie Mae and Freddie Mac.

The GSEs’ showing in the first quarter only reflects one full month of the impact of the coronavirus crisis. As potentially millions more homeowners stop paying their mortgages, the enterprises face the prospect of an even more challenging second quarter. (Includes data chart.)

Freddie Mac believes the market for credit-risk transfers may never return to pre-COVID levels because of the potential impact of the pandemic on mortgage performance.

The hiatus in the net worth sweep added $12.53 billion to the GSEs’ combined net worth over the last six months of 2019, including fourth-quarter profit of $4.27 billion at Fannie and $2.45 billion at Freddie. (Includes data chart.)

The Federal Home Loan Bank System saw a 21.2% decline in earnings during the second quarter of 2019.

Fannie and Freddie reported lower combined comprehensive income in the second quarter compared with a year ago. While net interest income and non-interest income declined, expenses shot up.

Calabria reports to Congress on the outlook for Fannie and Freddie. Then asks for powers like those of the FDIC and other financial regulators, including the authority to issue charters for new GSEs.