FHFA Reports On Fannie, Freddie And FHLBanks

ew senior management teams, both Fannie Mae and Freddie Mac have made strides in remediating problems, but they still face numerous significant challenges, including building and retaining staff and correcting operational and credit management weaknesses that led to conservatorship, reports the Federal Housing Finance Agency (FHFA). The FHFA's first Report to Congress details the findings of the agency's 2008 annual examinations of Fannie and Freddie, the Federal Home Loan Banks (FHLBanks) and the Office of Finance, and is a continuation of the annual report that FHFA's predecessor – the Office of Federal Housing Enterprise Oversight – used to deliver to Congress. Calling the government-sponsored enterprises (GSEs) "crucial concerns," the report notes that the GSEs' support of the mortgage market grew 5.6% last year, to a total of $5.2 trillion. "The problems of the last two years in the financial markets are slowly abating, but the challenges in the housing markets continue," says FHFA Director James Lockhart. "It is my hope that all market participants, the government and the GSEs will creatively work together to help the United States economy and housing market recover." The FHLBanks, meanwhile, continued to play a critical role in providing liquidity to their members through advances, which peaked at $1 trillion in October 2008. The report found that the FHLBanks' advance business continues to be a safe and sound business with no credit losses, despite the failures of some member institutions. The banks do, however, need to improve system financial reporting, controls and consistency, regulators say. Furthermore, the deterioration of private-label mortgage-backed securities represents a significant issue for Fannie Mae, Freddie Mac and several of the FHLBanks. SOURC


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