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®: CRE Regulatory Action of the Week

10 Percent Risk Weight Proposed for Freddie and Fannie Claims
On October 27, 2008, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, and the Office of Thrift Supervision published notice that they are proposing to adopt a 10 percent risk weight for claims on, and the portion of claims guaranteed by, Fannie Mae or Freddie Mac.

These proposed rules relate back to September 7, 2008, when the U.S. Department of Treasury entered into senior preferred stock purchase agreements with Fannie and Freddie, which effectively provide protection to the holders of senior debt, subordinated debt, and mortgage-backed securities issued or guaranteed by Fannie or Freddie. In light of the financial support provided under the Agreements, the proposed 10 percent risk weight would apply so long as an Agreement remains in effect with the respective entity.

The Federal agencies proposing these rules request public comments on them by November 26, 2008.

  • Click here to read risk weight notice and request for comments