Important Notices
September 15, 2008
Information on Fannie Mae and Freddie Mac Announcement
On September 7, 2008, the Treasury Department (Treasury) and the Government Sponsored Enterprise's new regulator, the Federal Housing Finance Agency (FHFA), announced that they were putting Fannie Mae and Freddie Mac into conservatorship with the FHFA as conservator. Treasury will provide support through a credit facility and purchase of stock and agency mortgage backed securities. Both preferred and common shareholders will be subordinate to Treasury.
The following link will take you to the announcement and fact sheets on the Treasury and FHFA actions: http://www.treas.gov/news/index1.html.
The Department of Financial Institutions and the federal banking agencies are assessing the exposures of banks and thrifts to Fannie Mae and Freddie Mac. The agencies believe that, while many institutions hold common or preferred shares of these two government-sponsored enterprises, a limited number of smaller institutions have holdings that are significant compared to their capital.
The Federal Reserve Board, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision are prepared to work with these institutions to develop capital-restoration plans pursuant to the capital regulations and the prompt corrective action provisions of the Federal Deposit Insurance Corporation Improvement Act.
All institutions are reminded that investments in preferred stock and common stock with readily determinable fair value should be reported as available-for-sale equity security holdings, and that any net unrealized losses on these securities are deducted from regulatory capital.
