Replies to post #638700 on Fannie Mae-No Politics (FNMA)

[kthomp19]

My interpretation is: "FHFA my need to lower the Capital requirement, but but as much as some groups are suggesting"

Mine was quite the opposite. To me, FSOC's quote says "hey Calabria, if you try to lower the capital requirement we are going to designate FnF as SIFIs".

risk-based capital requirements and leverage ratio requirements that are materially less than those contemplated by FHFA’s proposed capital rule would likely not adequately mitigate the potential stability risk posed by the GSE

i.e. Calabria won't be allowed to materially lower the capital requirements without FSOC stepping in.

Since such a designation carries even higher capital requirements than Calabria's, Calabria lowering his capital requirements would be self-defeating, therefore the capital requirements are likely to stay as-is.

In fact, my pet theory as to why Calabria set the capital requirements so high in the first place was to placate FSOC and avoid a SIFI designation. From FSOC's language, if Calabria's requirements had been materially lower in the first place they would have done just that.