Submitted Electronically

Alfred M. Pollard
General Counsel
Attention: Comments/RIN 2590–AB09
Federal Housing Finance Agency
400 Seventh Street SW, Washington, DC 20219

Re: Enterprise Liquidity Requirements / RIN 2590–AB09

Dear Sir,

SIFMA1 appreciates the opportunity to respond to FHFA’s proposed rule on Enterprise Liquidity Requirements (“Proposal”).2 Ensuring that the Enterprises have sufficient levels of high quality liquid assets (“HQLA”) is critical to ensuring that they will be able to fulfill their statutory mandates to provide liquidity, stability, and affordability to the U.S. housing market, in good times and in bad. The central role the Enterprises play in our housing finance and financial system demands that they be able to do so.

We write today regarding one aspect of the Proposal that has generated concern among our members –the prohibition on HQLA credit when lending cash through repurchase agreements secured by Agency MBS, even when they are cleared and risk managed at the FICC.3 We disagree with this prohibition, and believe it is premised on faulty reasoning as we will discuss below. Furthermore, we believe this prohibition would be detrimental to both the Enterprises’ ability to fulfill their statutory mandates as well as to the mortgage borrowers their charters are designed to serve.

To review, the Enterprises’ charter requires that they, among other things:4

• provide stability in the secondary market for residential mortgages;
• respond appropriately to the private capital market;
• provide ongoing assistance to the secondary market for residential mortgages…by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing;
• promote access to mortgage credit throughout the Nation…by increasing the liquidity of mortgage investments and improving the distribution of investment capital available for residential mortgage financing.