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Risk-Based Capital Rules Proposed Rulemaking on Capital Treatment of Certain Claims on or Guaranteed by Fannie Mae and Freddie Mac

Capital
October 31, 2008

Summary

The federal bank and thrift regulatory agencies (agencies) are seeking comment on the attached joint notice of proposed rulemaking (NPR) to permit banks, bank holding companies and savings associations (banking organizations) to assign a 10 percent risk weight to claims on or guaranteed by the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac). The FDIC will accept comments through November 26, 2008.

Highlights

  • In light of the financial support that the U.S. Department of Treasury has committed to Fannie Mae and Freddie Mac under the Government- Sponsored Enterprise Credit Facility and senior preferred stock purchase agreements (agreements), the agencies believe that a lower risk weight is appropriate for claims on these entities.
  • In the attached NPR, the agencies propose to allow banking organizations to assign a 10 percent risk weight to claims on or guaranteed by Fannie Mae and Freddie Mac.
  • Under the NPR, claims eligible for a 10 percent risk weight include all credit exposures, such as senior and subordinated debt and counterparty credit risk exposures, but do not include preferred or common stock.
  • The agencies propose that the 10 percent risk weight would apply to these exposures for the term of the agreements.

Distribution

FDIC-Supervised Banks (Commercial and Savings)

Suggested Routing

Chief Executive Officer

Chief Financial Officer

Chief Accounting Officer

Note

FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/financial-institution-letters/2008/index.html.

To receive FILs electronically, please visit http://www.fdic.gov/about/subscriptions/fil.html.

Paper copies of FDIC financial institution letters may be obtained through the FDIC's Public Information Center, 3501 Fairfax Drive, E-1002, Arlington, VA 22226 (1-877-275-3342 or 703-562-2200).

Additional Related Topics

  • Risk-Based Capital Rules
  • 12 CFR Part 325
Attachment(s)
Notice of Proposed Rulemaking on Minimum Capital Ratios

Last Updated: October 31, 2008