NCRC statement on FHFA final rule for Enterprise (GSEs) Regulatory Capital Framework

On Wednesday, the Federal Housing Finance Agency (FHFA) released a final Capital rule for the government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac. The rule requires the GSEs to maintain tier 1 capital in excess of 4%.

Jesse Van Tol, CEO of the National Community Reinvestment Coalition (NCRC), made the following statement:

“Key concerns we raised about the proposed rule persist in the final rule. The problem with this approach is that it erroneously treats the GSEs as banks and therefore requires bank-like capital. This leads to gratuitously high capital levels, raising mortgage rates and fees and further undermining the affordability of mortgage credit for underserved borrowers. This rule will add to the mounting challenges facing low- and moderate-income borrowers and borrowers of color who want to access homeownership and affordable refinances, there are just no two ways around it.  

“It’s a bad approach under any circumstances, but even more so as the nation faces uncertain and uncharted waters ahead recovering from the pandemic.”

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Redlining and Neighborhood Health

Before the pandemic devastated minority communities, banks and government officials starved them of capital.

Lower-income and minority neighborhoods that were intentionally cut off from lending and investment decades ago today suffer not only from reduced wealth and greater poverty, but from lower life expectancy and higher prevalence of chronic diseases that are risk factors for poor outcomes from COVID-19, a new study shows.

The new study, from the National Community Reinvestment Coalition (NCRC) with researchers from the University of Wisconsin–Milwaukee Joseph J. Zilber School of Public Health and the University of Richmond’s Digital Scholarship Lab, compared 1930’s maps of government-sanctioned lending discrimination zones with current census and public health data.

Table of Content

  • Executive Summary
  • Introduction
  • Redlining, the HOLC Maps and Segregation
  • Segregation, Public Health and COVID-19
  • Methods
  • Results
  • Discussion
  • Conclusion and Policy Recommendations
  • Citations
  • Appendix

Complete the form to download the full report: