GSEs Might Need as Long as 18 Months to Build Capital: Calabria
By Elizabeth Dexheimer
Federal Housing Finance Agency Director Mark Calabria says he expects Fannie Mae and Freddie
Mac to spend nine to 18 months retaining earnings to build up a sufficient capital cushion.
Calabria, speaking Thursday at George Mason University’s law school in Virginia, says it would be very
hard for GSEs to to raise capital in a down housing market or a down equity market
Calabria says finishing an FHFA capital rule for Fannie and Freddie is a prerequisite for the companies
to be able to sell shares
Calabria says FHFA is currently determining whether to re-propose a capital rule or to make changes to
a proposal issued by his predecessor
Fannie and Freddie don’t have to exit conservatorship at the same time, Calabria says
He says companies may have to operate under consent decrees with the government because they
might reach a point where they have sufficient capital to exit conservatorships, but not enough to
adhere to the FHFA’s requirements
FHFA is reviewing a host of options to make Fannie and Freddie more profitable because the
companies have to be attractive to potential investors in order to have successful share offerings,
Calabria says
FHFA hopes to have hired a financial adviser to offer expertise on Fannie and Freddie by the end of
November, if not sooner, he says
Calabria says he expects the Consumer Financial Protection Bureau to revise its so-called qualified
mortgage rule before a carve-out from the regulation for Fannie and Freddie expires in January 2021
FHFA is evaluating Fannie and Freddie’s underwriting standards, Calabria says

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