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Financial Institution Letters

Risk-Based Capital Rules
Proposed Rulemaking on Capital Treatment of Certain Claims on or Guaranteed by Fannie Mae and Freddie Mac
FIL-113-2008
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

Related Topics:
Risk-Based Capital Rules
12 CFR Part 325

Attachment:
Notice of Proposed Rulemaking on Minimum Capital Ratios; Capital Adequacy Guidelines; Capital Maintenance; Capital: Treatment of Certain Claims on, or Guaranteed by, the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) - PDF (PDF Help)

Contact:
Nancy Hunt, Senior Policy Analyst, at nhunt@fdic.gov or (202) 898-6643
Ryan Sheller, Capital Markets Specialist, at rsheller@fdic.gov or (202) 898-6614

Printable Format:
FIL-113-2008 - PDF (PDF Help)

Note:
FDIC financial institution letters (FILs) may be accessed from the FDIC's Web site at www.fdic.gov/news/news/financial/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).


Last Updated 10/31/2008 communications@fdic.gov