This section "Supervision of the Enterprises" details how and what Fannie Mae and Freddie Mac are doing.
The purpose of safety and soundness regulation of financial institutions is to give the institutions incentives to limit their risks and countervail the incentives created by an underpriced financial safety net. Safety and soundness regulation encompasses capital standards and limitations on the assets, activities, and risk exposures of such institutions.
The Federal Housing Enterprises Financial Safety and Soundness Act of 1992 grants the Director of the Office of Federal Housing Enterprise Oversight (OFHEO) authority to ensure Fannie Mae and Freddie Mac (the Enterprises) are adequately capitalized and operate in a safe and sound manner. To implement this statutory authority, OFHEO’s Director has established and implemented a supervisory program to examine the overall safety and soundness of the Enterprises.
OFHEO has committed, through its 2006 – 2011 Strategic Plan , to strengthen its regulatory infrastructure to enhance the supervision of the Enterprises. To meet this goal OFHEO created a Supervisory Handbook to improve the transparency of supervision processes, apply uniform standards to both Enterprises, and clarify OFHEO’s expectations of them. This handbook also facilitates the establishment of a quality assurance function to maintain consistent application of the supervisory standards and examination practices across Enterprises and to ensure that appropriate policies are followed.
OFHEO has established a risk-based safety and soundness supervision program supported by a set of unique, but interrelated and interactive functions. The Office of Supervision provides oversight and ensures coordination among all OFHEO mission-critical supervisory functions. These functions include programs for accounting and disclosure, capital adequacy, compliance, examination, financial analysis, policy development, quality assurance, and research. Each of these programs contributes to a comprehensive assessment of the safety and soundness of the Enterprises.
See this section to find detailed information reporting on OFHEO's Supervision of the Enterprises including the following: