The new capital proposal at this point is meaningless.
The FHFA is seeking comments on the proposal and the FHFA has not decided which of the two alternatives offered will be selected or if both will be enacted.
So no useful, practical comment can be made.
It is common financial sense and ordinary practice for any large financial institution, and certainly for those with financial regulators like the GSEs, to have capital requirements. The regulator sets the requirements.
Similar percentages and those higher have been bandied about for years in papers, hearings, conferences, etc.
Further, even if one or both alternatives or a composite one is selected, the selected rule(s) will not be effective until the conservatorships end. When that will occur is also unknown.
When Watt makes a decision or the next FHFA Director does so, at that time, there is something to work with.
Right now, this is Watt's parting pie in the sky. Source: FACT SHEET: PROPOSED RULE ON ENTERPRISE CAPITAL https://www.fhfa.gov/Media/PublicAffairs/PublicAffairsDocuments/Proposed-Rule-Enterprise-Capital-Fact-Sheet.pdf Capital
- Start at page 15 - Regulatory Capital Requirements https://www.fhfa.gov/SupervisionRegulation/Documents/Capital-Module.pdf
This is taken from the FHFA EXAMINATION MANUAL - https://www.fhfa.gov/SupervisionRegulation/ExaminerResources/Pages/Manual-and-Supplemental-Guidance.aspx