The Federal Housing Finance Agency’s Division of FHLBank Regulation is responsible for ensuring that the Federal Home Loan Banks operate in a financially safe and sound fashion, remain adequately capitalized and able to raise funds in the capital markets, and operate in a manner consistent with their housing finance mission. To carry out these statutory duties, FHFA’s Director has implemented a program of FHLBank supervision to conduct on-site annual examinations and off-site monitoring of the FHLBanks and the Office of Finance.
The Federal Housing Finance Agency examiners carry out a risk-based safety and soundness supervision program that assesses the FHLBanks’ condition and performance, governance, credit risk, market risk, and operational risk. These interdependent assessments provide FHFA with the basis for assigning a composite examination rating. The Division of FHLBank Regulation provides oversight and ensures coordination among all mission-critical examination and monitoring functions. These functions include programs for safety and soundness examinations, Affordable Housing Program (AHP) examinations, examination and supervisory policy and program development, FHLBank analysis, risk modeling, risk monitoring and information management, and risk analysis and research. Each of these programs contributes to a comprehensive assessment of the safety and soundness and the AHP effectiveness of the FHLBanks.
The Division of FHLBank Regulation is committed to strengthening both its on-site examinations and its off-site monitoring and analysis. The Division’s examination manual promotes consistency in the examination process and a risk-based approach to setting an examination’s scope. The manual is available on the Agency’s web site to enhance the transparency of the supervision of the FHLBanks and to clarify regulatory expectations. The examination manual also facilitates the establishment of a quality assurance function to ensure the integrity of the supervision program, to verify compliance with examination program policies and procedures, and to ensure that examination findings and conclusions are properly documented, analytically supported, and timely. |
The Federal Housing Finance Agency’s Division of Enterprise Regulation is responsible for ensuring that Fannie Mae and Freddie Mac are adequately capitalized and operate in a safe and sound manner. To implement this statutory authority, FHFA’s Director has implemented a supervision program to assess the overall safety and soundness of the Enterprises.
FHFA has established a risk-based safety and soundness supervision program that assesses the Enterprises’ governance, solvency, earnings, credit risk, market risk, and operational risk. These interdependent assessments provide FHFA with the basis for assigning a composite safety and soundness rating. The Division of Enterprise Regulation provides oversight and ensures coordination among all mission-critical supervisory functions. These functions include programs for accounting and disclosure, capital adequacy, examination, financial analysis, and supervision infrastructure. Each of these programs contributes to a comprehensive assessment of the safety and soundness of the Enterprises.
The Supervision Handbook was published to improve the transparency of supervision processes, apply uniform standards to both Enterprises, and clarify regulatory expectations. This handbook also facilitates the establishment of a quality management function to ensure the integrity of the supervision program, to verify compliance with policies and procedures, and to ensure that conclusions are well supported and timely. |