FHFA’s Capital Rule Is a Step Backward

Urban Institute, July 22, 2020–Jim Parrott, Bob Ryan, Mark Zandi
The authors summarize and critique FHFA’s recent capital proposal for Fannie Mae and Freddie Mac, concluding that it misapplies the bank capital regime in a way that would ultimately take the GSEs and the housing finance system in the wrong direction, unnecessarily leading to higher mortgage rates, riskier GSEs and a less stable housing finance system.