When the FHFA suspended the capital classifications, explained yesterday, it stated that the capital requirements aren't binding during conservatorship, which is a misleading statement because they are thresholds necessary to comply with its power: "put FnF in a sound and solvent condition", and also, the fact that there was a mandatory release Undercapitalized, that, although struck by Calabria with HERA, is evidence of the financial rehabilitation process during conservatorship. Restore capital levels to a minimum, or before at the discretion of the FHFA Director. A conservatorship isn't a state to make the FHFA Director become the CEO of the enterprises during 15 years, as the current management and the BOD don't have powers, regardless that this fact is being concealed to transmit a sense of normalcy in this state. For instance, FnF are parties in the Lamberth court, illegally signing all the court briefs. It has more to do with the word "may" in the conservator's power ("May put FnF..."), jointly with the "take any action authorized by this section, in the best interests of the Agency" in its Incidental Power. So, they are always binding and it can only mean that the FHFA has some leeway during conservatorship to fix their operations because it's supposed that the companies are bleeding or, as Freddie Mac explained better what "may" and the FHFA-C's Incidental Power might be about:
By the way, I guess you noticed that the amendment of HERA of the FHEFSSA's Minimum (Leverage) Capital requirement, was related to "revise" the existing percentages (1992 FHEFSSA), but until then, FnF have been posting the figures with the old requirements every quarter in their SEC filings and also in the FHFA Reports to Congress, because they are statutory, regardless of the FHFA's "not binding" remark. So, the game between Calabria withholding the publication of the ERCF tables until January 1st, 2022, despite being effective since February 16th, 2021, and the congressmen French Hill and McHenry, of keeping the ERCF tables from the Congress (now in the 2022 Report to Congress) at the time of the annual testimony of the FHFA director, so congressmen make up the figures in a convo with Sandra Thompson: "$100B vs $300B. I'm a former examiner", said one of them ($100B was the Net Worth at the time, not the Core Capital, and $300B was the official capital shortfall, not the Minimum Leverage Capital requirement. Adjusted $400B capital shortfall over $207B capital requirement), is pointless, because there is always the Minimum (Leverage) capital requirement with the old percentages, posted every quarter since day one.
There is nothing new "as of the passage of HERA", as the low profile DOJ attorneys peddle all the time, but a continuation of the FHEFSSA (and the Charter Act with the old low cost UST backup), as amended by HERA.
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