Capital requirements

The FHFA says the two government-sponsored enterprises need at least $240 billion of capital before they can go private; Transunion says more than 3% of consumer loans it tracks are in financial hardship.

The much-anticipated proposal, which would not go into effect until after Fannie Mae and Freddie Mac are privatized, reflects Director Mark Calabria’s aggressive efforts to get the companies on a strong financial footing.

Director Mark Calabria, who abandoned the Fannie and Freddie capital proposal written by his predecessor, said he expects a revised framework to be ready “very soon.”

The interim rule will allow institutions with over $250 billion of assets to exclude certain assets from the supplementary leverage ratio to help them respond to the economic fallout from the coronavirus pandemic.

In separate letters to Congress, the Fed asked for legislative action to ease Tier 1 capital minimums while the FDIC said it may use its own authority to address the market strain on banks.

The Financial Stability Board said it stood ready to coordinate additional help on capital requirements, upcoming regulatory deadlines and other standards.

The Federal Reserve and other regulators are planning to grant a sweeping capital break for banks providing loans to small businesses as part of the government's response to the coronavirus-fueled economic crisis.

The bank will be allowed to exceed the limit to enable it to make more small business loans; the CEOs of HSBC and StanChart are also donating part of their pay to coronavirus victim charities.

Banks will tell the Fed they would remain strong after payouts; customers would need $250,000 in liquid assets on deposit at the bank to qualify to refinance.

Many argue the economic turmoil from the pandemic makes the Comprehensive Capital Analysis and Review irrelevant this year, while others say testing banks’ capital strength is crucial now more than ever.