2017-07519. Orders: Reporting by Regulated Entities of Stress Testing Results as of December 31, 2016; Summary Instructions and Guidance

AGENCY:

Federal Housing Finance Agency.

ACTION:

Orders.

SUMMARY:

In this document, the Federal Housing Finance Agency (FHFA) provides notice that it issued Orders, dated March 3, 2017, with respect to stress test reporting as of December 31, 2016, under section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). Summary Instructions and Guidance accompanied the Orders to provide testing scenarios.

DATES:

Effective April 14, 2017. Each Order is applicable March 3, 2017.

FOR FURTHER INFORMATION CONTACT:

Naa Awaa Tagoe, Senior Associate Director, Division of Housing Mission & Goals, [phone], [e-mail]; Stefan Szilagyi, Examination Manager, FHLBank Modeling, FHLBank Office of Risk Modeling [phone], [e-mail]; Karen Heidel, Assistant General Counsel, Office of General Counsel, [phone], [e-mail]; or Mark D. Laponsky, Deputy General Counsel, Office of General Counsel, [phone], [e-mail]. The telephone number for the Telecommunications Device for the Hearing Impaired is [phone].

SUPPLEMENTARY INFORMATION:

I. Background

FHFA is responsible for ensuring that the regulated entities operate in a safe and sound manner, including the maintenance of adequate capital and internal controls, that their operations and activities foster liquid, efficient, competitive, and resilient national housing finance markets, and that they carry out their public policy missions through authorized activities. See 12 U.S.C. 4513. These Orders are being issued under 12 U.S.C. 4516(a), which authorizes the Director of FHFA to require by Order that the regulated entities submit regular or special reports to FHFA and establishes remedies and procedures for failing to make reports required by Order. The Orders, through the accompanying Summary Instructions and Guidance, prescribe for the regulated entities the scenarios to be used for stress testing. The Summary Instructions and Guidance also provides to the regulated entities advice concerning the content and format of reports required by the Orders and the rule.

II. Orders, Summary Instructions and Guidance

For the convenience of the affected parties and the public, the text of the Orders follows below in its entirety. The Orders and Summary Instructions and Guidance are also available for public inspection and copying at the Federal Housing Finance Agency's Freedom of Information Act (FOIA) Reading Room at https://www.fhfa.gov/​AboutUs/​FOIAPrivacy/​Pages/​Reading-Room.aspx by clicking on “Click here to view Orders” under the Final Opinions and Orders heading. You may also access these documents at http://www.fhfa.gov/​SupervisionRegulation/​DoddFrankActStressTests.

The text of the Orders is as follows:

Federal Housing Finance Agency

Order Nos. 2017-OR-B-01, 2017-OR-FNMA-01, and 2017-OR-FHLMC-01

Reporting by Regulated Entities of Stress Testing Results as of December 31, 2016

Whereas, section 165(i)(2) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires certain financial companies with total consolidated assets of more than $10 billion, and which are regulated by a primary Federal financial regulatory agency, to conduct annual stress tests to determine whether the companies have the capital necessary to absorb losses as a result of adverse economic conditions;

Whereas, FHFA's rule implementing section 165(i)(2) of the Dodd-Frank Act is codified as 12 CFR 1238 and requires that “[e]ach regulated entity must file a report in the manner and form established by FHFA.” 12 CFR 1238.5(b);

Whereas, The Board of Governors of the Federal Reserve System issued stress testing scenarios on February 3, 2017; and

Whereas, section 1314 of the Safety and Soundness Act, 12 U.S.C. 4514(a) authorizes the Director of FHFA to require regulated entities, by general or specific order, to submit such reports on their management, activities, and operation as the Director considers appropriate.

Now therefore, it is hereby Ordered as follows:

Each regulated entity shall report to FHFA and to the Board of Governors of the Federal Reserve System the results of the stress testing as required by 12 CFR 1238, in the form and with the content described therein and in the Summary Instructions and Guidance, with Appendices 1 through 12 thereto, accompanying this Order and dated March 3, 2017.

It is so ordered, this the 3rd day of March, 2017.

This Order is effective immediately.

Signed at Washington, DC, this 3rd day of March, 2017.

Melvin L. Watt,

Director, Federal Housing Finance Agency.

Dated: April 6, 2017.

Melvin L. Watt,

Director, Federal Housing Finance Agency.