In “FHFA’s Capital Rule is a Step Backward”, Jim Parrott, Bob Ryan, and Mark Zandi comment on the FHFA’s recently proposed capital rule for Fannie Mae and Freddie Mac, which requires the two entities to hold capital at least equal to a certain percentage of their total assets [1]. The authors conclude that this proposed framework would lead to higher mortgage rates, lower market share for the GSEs, higher GSE credit risk exposure, and a less stable housing finance system. The authors used Recursion data to demonstrate the impact of mortgage rate changes under the proposed capital framework on mortgage market shares. The paper is accessible through the link below: https://www.economy.com/getlocalq=298f7a13834466aa81c0b495a99f6bbc&app=eccafile |
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