Friday, October 10, 2008

FHFA Issues Statement About Capital Classifications for Fannie & Freddie

The Federal Housing Finance Agency (FHFA) declared Fannie Mae and Freddie Mac as “undercapitalized” Thursday, despite reports in June from both entities that stated they had maintained more capital than required. However, FHFA expressed concerns that much of this capital was comprised of “intangible assets,” and the regulator suspended capital classifications – which would determine how the two mortgage giants should manage their assets – yesterday. FHFA issued a statement that said it will continue to “closely monitor” Fannie and Freddie’s capital levels, but also specified that any minimum capital requirements “will not be binding during the conservatorship.”

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