OFHEO Announces 2nd Qtr 2007 Minimum and Risk-Based Capital Classification For GSEs
October 2, 2007
WASHINGTON, DC — James B. Lockhart, Director of the Office of Federal Housing Enterprise Oversight (OFHEO), the safety and soundness regulator for Fannie Mae and Freddie Mac, classified Fannie Mae and Freddie Mac as adequately capitalized as of June 30, 2007. Fannie Mae’s classification is based on estimated numbers submitted by Fannie Mae and not financial statements released to shareholders. Freddie Mac’s classification is based on numbers consistent with their Second Quarter Financial Statements and Information Statement released on August 30, 2007.
Fannie Mae had a 7.5 percent surplus above the OFHEO-directed requirement, which is 30 percent above the required minimum capital. Freddie Mac’s surplus above the OFHEO-directed requirement was 5.1 percent. Both Enterprises’ percentages reflect declines from the prior quarter, primarily due to higher capital requirements caused by asset growth.
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 minimum and risk-based capital standards to be classified as adequately capitalized.