Monday, March 17, 2008

Fannie, Freddie Could See Easing of Capital Requirement

The Fed needed FNM to reliquify in '98, it's déjà vu all over again.
From the Wall Street Journal:

Government officials are moving forward with a potential deal that could allow Fannie Mae and Freddie Mac to increase their support for the mortgage market by buying and guaranteeing more home loans. An announcement could come as soon as this week.

The Office of Federal Housing Enterprise Oversight is close to reducing, but not completely removing, an excess capital requirement it has in place at both firms, people familiar with the matter said. The requirement, imposed in the wake of accounting problems several years ago, forces them to hold 30% more capital than their normal minimums.

An Ofheo spokeswoman declined to comment.

More leeway on capital would give the companies more flexibility to buy mortgages and package them into securities for sale to investors worldwide. Fannie Mae and Freddie Mac would both be expected to raise more capital, giving them a bigger cushion against potential losses, people familiar with the matter said. Lawmakers have also been briefed on the plans....MORE

From the New York Times:
The Office of Federal Housing Enterprise Oversight, which oversees the two government-chartered mortgage giants, said Wednesday that it was making the change because the companies have begun filing timely financial reports again...MORE