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FHFA Director Mark Calabria's Statement at the Financial Stability Oversight Council Principals Meeting on March 31, 2021


Public Remarks as Prepared for Delivery

Dr. Mark A. Calabria 

Director, Federal Housing Finance Agency



Wednesday, March 31, 2021


Thank you, Madam Chair. And I want to welcome all of the Council’s new members.

FHFA has recognized that our mortgage finance system may be exposed to climate and natural disaster risk. As a safety and soundness regulator, FHFA is actively working to ensure we are accounting for these risks in our prudential supervision of Fannie Mae, Freddie Mac, and the Federal Home Loan Banks.

FHFA has already developed a strong framework for our regulated entities to respond to the impacts of natural disasters on borrowers and renters. That work served as the foundation for many of the Agency’s COVID relief policies. These successful disaster responses positioned FHFA to look forward. 

We are now focused on strengthening our capabilities to identify and assess the current and future exposure of our regulated entities to climate and natural disaster risk. And we are exploring ways to potentially enhance our supervisory and regulatory approach. 

In January 2020, FHFA established a new Division of Research and Statistics to build out our data and analytical capabilities. Last fall, DRS brought together many leading climate risk experts and researchers at its biannual economic research summit. And DRS will soon be welcoming two environmental economists to the team.  

In November, the Agency finalized a regulatory capital framework for Fannie Mae and Freddie Mac that recognizes that the risks that climate change could pose are difficult to quantify but potentially material. Loss-absorbing capital, particularly in the form of common equity, is the strongest protection for financial institutions against any negative shock, including those from natural disasters or abrupt repricing. FHFA’s first priority is thus building capital at the Enterprises.

FHFA and Treasury have cooperated in amending their agreements to allow Fannie and Freddie to retain earnings as one means of building capital, with Treasury requiring provisions to protect its investment. These are important steps toward building the capital that can better protect the mortgage finance system against climate change.

The Enterprises will also need to raise private capital to realistically become safe and sound. FHFA looks forward to working with Treasury and addressing its priorities in structuring its investment going forward such that the Enterprises can reach a safe level of capital.  

To help coordinate FHFA’s many efforts on climate and natural disaster risk, last year we established an Agency-wide working group made up of representatives from every major office and division.

And this year, FHFA released a Request for Input, and held a public listening session, on climate and natural disaster risk management at the regulated entities. The RFI requested information on a range of topics, including disproportionate impact on low-income and minority communities, closing important data gaps, and enhancing FHFA’s supervision and regulation.

Since this is a public session, before I close, I strongly encourage anyone with relevant information, including the agencies represented here today, to submit a written response to the RFI by the deadline of April 19. 

Madam Chair and fellow members of the Council, I look forward to continuing to work with you on these and future matters. Thank you.




​Raffi Williams Raffi.Williams@FHFA.gov / Adam Russell Adam.Russell@FHFA.gov​​​​

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