The Federal Housing Finance Agency (FHFA) has announced a proposed rule that aims to improve the capital planning practices of Fannie Mae and Freddie Mac. This proposal, known as the Enterprise Capital Planning Rule, is designed to ensure these entities are well-prepared for financial challenges.
Sandra L. Thompson, Director of FHFA, stated, "Today's proposed rule would enhance capital planning practices at the Enterprises by establishing requirements for them to develop annual capital plans and submit them to FHFA for review."
Under this new directive, Fannie Mae and Freddie Mac will be required to conduct stress tests and assess their ability to maintain adequate capital levels under various economic conditions. The proposal also includes guidelines on risk management and governance processes related to capital planning.
Thompson further emphasized the importance of this initiative: "The proposed rule would provide a structured framework for assessing whether each Enterprise has sufficient capital to continue operating during times of economic stress."
Public comments on the proposed rule will be accepted until June 30, 2024. The FHFA encourages stakeholders and interested parties to provide feedback during this period.