[Federal Register Volume 65, Number 145 (Thursday, July 27, 2000)]
[Proposed Rules]
[Page 46119]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-18833]


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DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT

Office of Federal Housing Enterprise Oversight

12 CFR Chapter XVII


Notice of Safety and Soundness Regulation

AGENCY: Office of Federal Housing Enterprise Oversight, HUD.

ACTION: Notice of regulatory project.

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SUMMARY: Office of Federal Housing Enterprise Oversight (OFHEO) is 
issuing notice of a regulatory project designed to ensure the adoption 
and implementation of various written policies and procedures for the 
supervision of Federal National Mortgage Association and the Federal 
Home Loan Mortgage Corporation (the ``enterprises''). In accordance 
with OFHEO's supervisory mandate, as established in Title XIII of the 
Housing and Community Development of Act of 1992, known as the Federal 
Housing Enterprises Financial Safety and Soundness Act of 1992, OFHEO 
will formalize ongoing supervisory policies and procedures that are 
reflected in the agency's various examination guidelines and other 
supervisory pronouncements, and update and revise its supervisory 
standards in light of market changes. The effect of this project is to 
enhance safety and soundness, to clarify interpretations of applicable 
laws and regulations, to provide greater transparency to and public 
understanding of the regulatory regime affecting the enterprises, and 
to provide a clear expression of the regulatory basis for OFHEO action 
in matters of supervisory concern.

FOR FURTHER INFORMATION CONTACT: Alfred M. Pollard, General Counsel, or 
David W. Roderer, Deputy General Counsel, Office of Federal Housing 
Enterprise Oversight, 1700 G. Street, NW., Fourth Floor, Washington, DC 
20552, telephone (202) 414-6924 (not a toll free number). The telephone 
number for the Telecommunications Device for the Deaf is: (800) 877-
8339.

SUPPLEMENTARY INFORMATION: The Office of Federal Housing Enterprise 
Oversight (OFHEO) is charged by Congress with overseeing the business 
conduct and financial operations of the Federal National Mortgage 
Association and the Federal Home Loan Mortgage Corporation in order to, 
among other things, ensure that they are adequately capitalized and 
operating safely. In furtherance of its supervisory responsibilities, 
the agency is empowered to adopt safety and soundness standards, to 
conduct examinations monitoring compliance by the enterprises with such 
standards, and to enforce compliance with the standards it may 
establish.
    OFHEO has since its inception in 1993 operated under a system 
largely without a full complement of promulgated regulatory standards 
or procedures. The agency relies primarily upon the strength of its 
examination staff, examination guidelines and procedures, and 
unpublished letters. Little public recognition exists of the prudential 
standards under which the enterprises successfully operate. The project 
will produce greater transparency of OFHEO's regulatory processes and 
the safeguards affecting the secondary market entities. The resulting 
increased public awareness of the supervisory standards applicable to 
this critical segment of housing finance should promote enhanced market 
understanding of the relative strengths and viability of the 
enterprises.
    In accordance with OFHEO's supervisory mandate under Pub. L. No. 
102-550, the agency is undertaking a regulatory project designed to 
ensure the adoption and implementation of written policies and 
procedures for the enterprises that address, among other matters, (1) 
management responsibilities (addressing board and senior management 
roles and responsibilities, and minimum internal control standards for 
monitoring and reporting policies and procedures affecting specified 
subject areas); (2) risk management (formalizing quantitative and 
qualitative standards in appropriate areas including asset-related 
matters, credit risk, interest rate risk, and operational risks); (3) 
investments (addressing limits on types of investments and setting 
forth record keeping and disclosure requirements); (4) information 
systems security and integrity (formalizing standards and safeguards); 
(5) financial information disclosure (specifying applicable disclosure 
standards); (6) executive compensation (codifying procedures and 
standards for agency review of senior executive compensation and 
termination benefits); and, (7) enforcement policies and procedures 
(clarifying relevant procedures and formal and informal enforcement 
sanctions available to the agency).

    Dated: July 20, 2000.
Armando Falcon, Jr.,
Director, Office of Federal Housing Enterprise Oversight.
[FR Doc. 00-18833 Filed 7-26-00; 8:45 am]
BILLING CODE 4220-01-U