12/28/2023 0 Comments Freddie mac conference![]() FHFA has a statutory responsibility to ensure the Enterprises "operate in a safe and sound manner" and that "the operations and activities of each regulated entity foster liquid, efficient, competitive, and resilient national housing finance markets." We typically refer to this requirement as "supporting a stable and liquid mortgage market." ![]() Second, even though the Enterprises are in conservatorship, without further statutory changes they have the same mission as they did prior to being placed into conservatorship, which is broadly to support the secondary mortgage market. Some market discipline was realized because none of the classes of equity securities were protected and senior executives, starting with the two CEOs and the two boards of directors, were replaced.Īs conservator and regulator, FHFA has three principal mandates set forth in law that direct and motivate FHFA’s activities and decisions involving the Enterprises.įirst, FHFA has a statutory responsibility as conservator of the Enterprises to "take such action as may be: necessary to put the regulated entity in a sound and solvent condition and appropriate to carry on the business of the regulated entity and preserve and conserve the assets and property of the regulated entity." As FHFA has noted on numerous occasions, with taxpayers providing the capital supporting the Enterprises’ operations, this "preserve and conserve" mandate directs us to minimize losses on behalf of taxpayers. Continued solvency was an announced policy goal in order to avoid triggering mandatory receivership and it gave comfort to the companies’ debt holders and mortgage-backed securities holders that the government was providing adequate financial support to those securities. On September 7, 2008, FHFA announced that it had placed both Enterprises into conservatorship and the Treasury Department announced it was supporting the ongoing operations of the two companies in conservatorship with a commitment of ongoing capital injections, as needed, to ensure the companies’ continued solvency. The key concern at the time was that the private secondary mortgage market had vanished and the Enterprises’ significant position in capital markets meant that their disappearance from the market could have posed a systemic threat to financial markets and the broader economy. As market conditions deteriorated significantly, concerns about the Enterprises’ credit loss exposure and capital positions became more urgent, and it became clear that neither company was able to raise additional capital. The events taking place in the months leading into September 2008 are generally familiar by now. The Backdrop and Framework of Conservatorship Today I would like to review the basic guiding principles of how the conservatorships have been operated over the last three years, the challenges faced by the Federal Housing Finance Agency (FHFA) in carrying out its conservatorship responsibilities, and in light of those challenges, where we are headed with the conservatorships in the future. ![]() We just passed the third anniversary of placing Fannie Mae and Freddie Mac-or what I will refer to as the Enterprises-into conservatorship. Thank you for inviting me to speak here today. ![]()
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