Late last week the Federal Housing Finance Agency
(FHFA) and the U.S. Department of the Treasury (Treasury) agreed to amend the
Preferred Stock Purchase Agreements
(PSPAs) which govern the required distribution
of dividends to Treasury from the government sponsored enterprises (GSEs)
Fannie Mae and Freddie Mac. The amendments will bring the amount of capital the
companies are permitted to retain into conformance with the 2020 Enterprise
Capital Rule unveiled by FHFA in November. Under that rule, the GSEs will be
allowed to retain earnings to maintain tier 1 capital in excess of 4.0 percent
of their guarantee obligations
to avoid restrictions on capital distributions
and discretionary bonuses.


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