The GSEs Fannie Mae and
Freddie Mac have been given orders to develop so-called living wills. Such
wills are credible resolution plans that outline how either GSE could be
rapidly and orderly resolved should the Federal Housing Finance Agency (FHFA) be
appointed their receiver in the event of another financial crisis. The mandate
is in the form of a final rule issued by FHFA on Monday.
The rule is similar to those
issued by the Federal Reserve and the Federal Deposit Insurance Corporation (FDIC)
under which many large financial institutes are required to submit such wills.
Both the Department of the Treasury and the Financial Stability Oversight
Council have endorsed living rules for the GSEs.