FSOC: GSEs’ activities pose potential risk to financial system

The Financial Stability Oversight Council (FSOC) Friday met to discuss its activity-based review of the secondary mortgage market and acknowledged that the government-sponsored enterprises’ (GSEs) activities, if not mitigated, pose a risk to the financial system. The Council warned that should the GSEs fail, access to capital for first-time homebuyers could be significantly reduced.

Federal Housing Finance Agency (FHFA) Director Dr. Mark Calabria serves on FSOC alongside NCUA Chairman Rodney Hood and leaders of other federal and state regulatory bodies. View Calabria’s remarks on the Council’s findings. 

Calabria previously offered his support for FSOC’s review stating that, “As demonstrated by the 2008 financial crisis and again by COVID-19, Fannie Mae and Freddie Mac must be well capitalized in order to support the mortgage market during a stressed environment.”

The Council recommended the GSEs adopt capital requirements within the minimum capital levels outlined in the FHFA’s proposed rule, which would require the GSEs to maintain the following risk-based capital levels:

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