Washington, D.C. – Armando Falcon, Jr., Director of the Office of Federal Housing Enterprise Oversight (OFHEO), safety and soundness regulator for Fannie Mae and Freddie Mac (the Enterprises), has determined that the Enterprises were adequately capitalized under OFHEO’s capital standards as of September 30, 2002.
“This is the first quarter for which the Enterprises’ capital classifications are based on both the minimum and risk-based capital requirements. I am pleased to report that Fannie Mae and Freddie Mac have met these stringent requirements. This is a critical milestone in ensuring the financial health of the nation’s housing finance system,” said Director Falcon.
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 requires the OFHEO Director to determine the capital level and classification of the Enterprises not less than quarterly, and to report the results to Congress. OFHEO classifies the Enterprises as adequately capitalized, undercapitalized, significantly undercapitalized or critically undercapitalized.
The Enterprises are required by Federal statute to meet both capital standards to be classified as adequately capitalized. Under the terms of that statute, this is the first quarter that the risk-based standard is fully enforceable. OFHEO conducted and published results of two trial tests of the risk-based capital standard (in June and September) during the statutory one-year implementation period, which ended Sept. 13, 2002. The Enterprises passed both trial runs of the risk-based capital test.
Attachment: Fannie Mae and Freddie Mac Risk-Based and Minimum Capital Results
Stefanie Johnson (202) 649-3030