Letter to FHFA on Resolution Planning Requirements for Fannie Mae and Freddie Mac

Federal Housing Finance Agency
Eighth Floor
400 Seventh Street SW
Washington, DC 20219

Ladies and Gentlemen:

The American Bankers Association (ABA) appreciates this opportunity to provide the views of our members on the Proposal. The Proposal would require the Fannie Mae and Freddie Mac (GSEs) to prepare resolution plans (also known as “living wills”) similar to those that large banking organizations have been required to submit since 2012 under the Dodd-Frank Act. The Proposal, like the regulations for large bank resolution plans, describes the proposed content of the plans, the timing and process for filing, receiving and reacting to feedback from the Federal Housing Finance Agency (FHFA), updating for material changes, the proposed extent of public disclosure of resolution plan information, and resolving deficiencies and shortcomings. The Proposal also raises a number of specific questions on which FHFA invites feedback.

Key Considerations and Objectives of the GSE Resolution Planning Process

In its implementation of resolution planning rules, FHFA should follow three important principles:

• FHFA rightly acknowledges that resolution of GSEs must take into account reliance on their operations by other market participants, and that substitute actors for what GSEs do likely will not be readily available. This objective is required under the Safety and Soundness Act. There are many useful lessons learned from bank livings wills process, but GSE resolution planning objectives are unique.
• Transparency is vitally important – the GSEs’ resolution plans’ public sections must be more extensive than those for banking organizations, because of the higher degree of public interest in the continued stability and functioning of the national housing market.
• The Proposal generally fits the GSEs’ current circumstances, but there should be no delay in the progress of GSE reforms. Those reforms will likely alter the requirements of GSE resolution framework and planning.

Download the comment letter to read the full text.