Comments are due 60 days following publication in the Federal Register.
The proposed rule mandates that the Enterprises’ capital plans include:
- An assessment of the expected sources and uses of capital over the planning horizon;
- Estimates of projected revenues, expenses, losses, reserves, and pro forma capital levels under a range of the Enterprise’s internal scenarios, as well as under FHFA’s scenarios;
- A description of all planned capital actions over the planning horizon;
- A discussion of how the Enterprise will, under expected and stressful conditions, maintain capital commensurate with the business risks and continue to serve the housing market; and
- A discussion of any expected changes to the Enterprise’s business plan that are likely to have a material impact on the Enterprise’s capital adequacy or liquidity.
The proposed rule also incorporates the determination of the stress capital buffer from the final Enterprise Regulatory Capital Framework (ERCF) into the capital planning process.
The planning horizon would be defined as at least nine consecutive quarters for the FHFA scenarios and at least five years for the internal scenarios, consistent with the Enterprises’ corporate forecasts. FHFA’s proposal differs from the banking framework, which has a nine-quarter horizon for both the regulator’s scenarios and bank’s internal scenarios. According to FHFA, a longer-term horizon for the internal scenarios would better allow the Agency to assess each Enterprise’s plan to rebuild capital to come into compliance with the ERCF.