The Federal Housing Finance Agency (FHFA) has proposed a new rule introducing liquidity and funding requirements for Fannie Mae and Freddie Mac, addressing weaknesses revealed during the 2008 financial crisis. These requirements aim to ensure the companies have enough liquid assets to cover short-term and long-term financial needs, reducing the risk that they will require taxpayer bailouts. The rule also includes reporting obligations for the companies, mandating that their liquidity positions and management strategies be shared with FHFA and the public. The proposal invites public comments and suggests adjustments to liquidity requirements during economic stress.
Simple Explanation
The FHFA wants Fannie Mae and Freddie Mac to have plans so they always have enough money to pay their bills, even when things get tough, so they don’t need to borrow from others.