Fannie and Freddie Capital Buffers Can’t Wait -FHFA Director

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Posted To: MND NewsWire

While assuring members of Congress that it is their role to make decisions about housing finance reform, Melvin L. Watt, Director of the Federal Housing Finance Agency (FHFA), made it clear that the issue of GSE capital buffers was one decision that cannot wait. Watt, speaking to members of the House Financial Services Committee on Tuesday, said the statutory obligations of his agency as conservator of the GSEs, Fannie Mae and Freddie Mac, make it essential they maintain investor confidence in their safety and soundness. The GSEs are currently required, under terms of their Preferred Stock Purchase Agreement (PSPA) with the U.S. Treasury, to pay dividends to Treasury each quarter in the amount of their net profits less a capital reserve. That reserve or buffer has, as intended, decreased each…(read more)

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