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  • Comment Detail

  • Date: 10/27/21
    First Name: Ruben
    Last Name: Gonzalez
    Organization: N/A
    City: N/A
    State: N/A
    Attachment: N/A
    Number: RIN-2590-AB17

  • Comment

    I am writing in response to the request for input on the Capital Framework and use of the Credit Risk Transfers.
    In regards to the Capital Framework: The risks taken by the GSE's are significantly different than the risks banks have and for the reason the Basel standards for Capital are way off on the amount of capital the GSE's should retain. The Basel idea would require the GSE's to retain way too much capital which would increase the cost of doing business to the point that it would affect the mission of the GSE's to provide low cost financing to borrowers for a conventional mortgage. The Stress Tests that were completed the last 2 years show a much better picture of what is needed by the GSE's to retain for capital if they were to encounter a severe market downturn. Many other professional in the industry have stated the negative affects and costs of the GSE's needing to retain too much capital which would be passed on to home owners.
    In regards to the Credit Risk Transfers: There have been many reports of the costs VS the benefits of the CRT's and it is now common knowledge that the CRTs costs out weigh the benefits by a huge factor, even in a severe downturn where the GSE's could pass off losses. During good times the CRT's are a total waste of GSE's income which could be set aside for future losses. In bad times I am sure the CRT providers would be unwilling to accept any new CRT's as they would be unwilling to accept the risk.
    Please accept this opinion and utilize the many reports created which document the actual capital needed in a time of stress when creating the new capital requirements for the GSE's.

    Please fix this problem!