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Mission and Goals of the GSEs. The Director‘s principal duties are to oversee the prudential
operations of each regulated entity, and to ensure that each entity operates in a safe and sound
manner, including maintenance of adequate capital and internal controls, the operations and
activities of each entity foster liquid, efficient, competitive, and resilient national housing finance
markets and the entities comply with this Act, their mission and in a manner consistent with the
public interest.
The Director will be advised by a Federal Housing Finance Oversight Board composed of the
Secretary of the Treasury, the Secretary of Housing and Urban Development, the Chairman of
the Securities and Exchange Commission and the Director, who shall serve as the Chairperson of
the Board. The Director has the ability to require regular and special reports from the GSEs and
to impose penalties for any failure to file reports. The Agency will have an examination staff
and the ability to make assessments to cover the cost of running the Agency and supervising the
GSEs. The Director also has general rule making and regulatory authority.
The Director is required to establish prudential management and operations standards governing
the following topics: internal controls and information systems, internal audit systems,
management of interest rate risk exposure, management of market risk, adequacy and
maintenance of liquidity and reserves, management of asset and investment portfolios growth,
investments and acquisitions of assets, overall risk management processes, including oversight
by senior management and the boards of the GSEs, reputational risk, business resumption plans,
management of credit and counterparty risk, maintenance of adequate records and such other
operational and management standards as the Director determines to be appropriate. The
Director is required to consult with and consider the views of the Chairman of the Federal
Reserve Board when establishing these standards, the capital requirements of the GSEs and any
decision to place a GSE in conservatorship or receivership.
PORTFOLIO MANAGEMENT - The Director shall regulate the portfolio holding of the GSEs
to ensure that the holdings are backed by sufficient capital, and consistent with the mission and
the safe and sound operations of the GSEs. In establishing such criteria, the Director shall
consider the ability of the GSEs to provide a liquid secondary market through securitization and
the portfolio holdings in relation to the overall mortgage market. The Director has authority to
make temporary adjustments to the portfolio holdings of a GSE by order.
RISK BASED CAPITAL LEVELS - The Director also has authority to set risk-based capital
levels for the GSEs. The Director may establish risk-based capital requirements for any product
or activity of a GSE to ensure that the GSE operates in a safe and sound manner, with sufficient
capital and reserves to support the risks that arise in its operation. The Title also requires the
GSEs to register their securities with the SEC under the securities laws. The Director also has
the authority to limit golden parachutes to executives of the GSEs, and to review and limit the
compensation of the senior executives of the GSEs.
TEMPORARY AUTHORITY FOR TREASURY TO INVEST IN THE GSEs - Title I
grants the Secretary of the Treasury temporary authority to purchase obligations and securities of
the GSEs and Home Loan Banks. This authority authorizes the Secretary of the Treasury to
purchase any obligations and other securities issued by the GSEs and Home Loan Banks on such
AMERICAN BANKERS ASSOCIATION 2