§4612 Minimum capital levels

Summary

Sets the minimum amount of capital that each housing finance enterprise and each Federal Home Loan Bank must hold. For an enterprise, the minimum is three parts added together: 2.50 percent of its on‑balance‑sheet assets (measured under generally accepted accounting rules); 0.45 percent of the unpaid principal on its outstanding mortgage‑backed securities and similar instruments not counted in the first part; and 0.45 percent of other off‑balance‑sheet obligations not counted in the second part (excluding commitments that exceed 50 percent of the average quarterly commitments over the prior four quarters). The Director can change that last 0.45 percent to reflect different credit risks. For a Federal Home Loan Bank, the minimum is the capital needed to meet the leverage rule in section 1426(a)(2). The Director may set higher minimums by rule to keep entities safe and sound. The Director can also order a temporary increase when needed, must withdraw it when no longer justified, and must make rules that say how temporary increases are imposed, reviewed, and ended. The Director may set capital or reserve rules for any product or activity at any time. The Director must review the enterprises’ core capital, the banks’ retained capital, and the minimum levels on a regular basis.