Fannie Mae and Freddie Mac are one step closer to having a risk-based capital standard to ensure they are adequately capitalized during extreme financial circumstances.

The Office of Federal Housing Enterprise Oversight (OFHEO), the safety and soundness regulator for the government-sponsored enterprises, closed its comment period on the proposed rule Friday, March 10, 11 months after announcing the rule. According to an OFHEO spokeswoman, the agency received 56

comments.

Both GSEs had submitted comments to OFHEO, stating that the rule still needs to be tweaked slightly, but they are confident that a final rule that they all can agree on will be put into effect.

Freddie Mac addressed OFHEO with four points the agency would like to see with the rule. They are, according to Freddie Mac spokesman Douglas Robinson, that the final rule be consistent with the law, be operational and workable, accommodate innovation that allows Freddie Mac to develop new products that it can predict the capital requirements for, and tie capital to risk.

"We certainly think that the rule needs to be tweaked, but that the final rule will meet everyone's objectives," he said, adding that OFHEO Director Armando Falcon said that he agreed with Freddie Mac's points.

"We look forward to reviewing the comments with an open mind. It is my top priority to implement a strong, state-of-the-art, risk-based capital regulation," Falcon said in a press release.

Representatives from Fannie Mae did not return phone calls by press time.

In addition to the comment period ending, Falcon announced a 30-day reply-comment period, in which comments will be noted that only respond to submitted comments and do not repeat initial comments at length. That period ends Friday, April 14, and at press time, OFHEO has not received any reply comments.

Falcon stated that it was necessary for the reply-comment period "in order to provide an opportunity for interested parties to comment on the views of other interested parties."

Those wishing to view the received comments can do so at OFHEO's offices.

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