Nov 3 -- The Federal Housing Finance Agency (FHFA or the Agency) is seeking comments on a notice of proposed rulemaking (proposed rule) that would introduce new standardized approach disclosure requirements for the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac, and with Fannie Mae, each an Enterprise), including disclosures related to regulatory capital instruments and risk-weighted assets calculated under the Enterprise Regulatory Capital Framework (ERCF). Comments must be received on or before January 3, 2022.
FHFA is seeking comments on new public disclosure requirements for the Enterprises. This proposed rule would expand the disclosure requirements set forth in the ERCF published in the Federal Register on December 17, 2020 (85 FR 82150) in order to improve market discipline and encourage sound risk-management practices through meaningful public disclosure. With public disclosures that are clear, comprehensive, useful, consistent over time, and comparable across Enterprises, FHFA believes that market participants would have sufficient information to assess an Enterprise's material risks and capital adequacy, contributing to the safety and soundness of the Enterprises and decreasing risk to the U.S. taxpayers.
The proposed rule would implement standardized approach public disclosure requirements for the Enterprises that align with many of the public disclosure requirements for large banking organizations under the regulatory capital framework adopted by United States banking regulators (U.S. banking framework). Modern bank disclosure requirements were initially contemplated by the Basel Committee on Banking Supervision (BCBS) under Pillar 3 of Basel II in order to complement the minimum capital requirements and the supervisory review process and were later expanded with additional requirements in Basel III. In much the same way, the public disclosure requirements in the proposed rule would complement the ERCF as it aims to ensure that each Enterprise operates in a safe and sound manner and is positioned to fulfill its statutory mission to provide stability and ongoing assistance to the secondary mortgage market across the economic cycle, in particular during periods of financial stress.
Consistent with these stated objectives, and complementary to the Enterprises' statutory duties and purposes, the proposed rule would implement disclosure requirements related to risk management, corporate governance, and regulatory capital, including risk-weighted assets calculated under the ERCF's standardized approach, statutory capital requirements, supplemental capital requirements, and capital buffers. In contrast to U.S. banking organizations that are each either a standardized approach institution or an advanced approaches institution, an Enterprise is required to satisfy all requirements under both the standardized approach and the advanced approach in the ERCF, including any associated disclosure requirements. Therefore, the proposed rule adapts the public disclosure requirements in the U.S. banking framework to reflect the ERCF's standardized approach, blending elements from the U.S. banking framework's standardized and advanced approaches and establishing a level playing field for public disclosures between the Enterprises and large, domestic banking organizations. While the proposed rule would implement disclosure requirements for the ERCF's standardized approach only, FHFA may in the future consider additional disclosure requirements related to the advanced approaches. FHFA seeks comments on all elements of the proposed public disclosure requirements.
FR notice inviting public comments: https://www.federalregister.gov/documents/2021/11/03/2021-23780/enterprise-regulatory-capital-framework-public-disclosures-for-the-standardized-approach