Regulatory Capital Requirements

12 Months Ended

Dec. 31, 2023

Broker-Dealer, Net Capital Requirement, SEC Regulation [Abstract]

Regulatory Capital Requirements

Regulatory Capital Requirements

The enterprise regulatory capital framework rule that is applicable to us was initially published by FHFA in December

2020 and subsequently amended in 2022 and 2023. Although the enterprise regulatory capital framework went into

effect in February 2021, we are not required to hold capital according to the framework’s requirements until the date of

termination of our conservatorship, or such later date as may be ordered by FHFA.

The enterprise regulatory capital framework includes the following requirements under the standardized approach

related to the amount and form of capital we must hold:

•Supplemental leverage and risk-based minimum capital requirements based largely on definitions of capital

used in U.S. banking regulators’ regulatory capital framework. Under the leverage capital requirement, we must

maintain tier 1 capital equal to at least 2.5% of adjusted total assets. Under the risk-based capital requirements,

we must maintain common equity tier 1 capital, tier 1 capital, and adjusted total capital equal to at least 4.5%,

6.0%, and 8.0%, respectively, of risk-weighted assets;

•A requirement that we hold prescribed capital buffers that can be drawn down in periods of financial stress. In

general, once we are required to be in compliance with the capital buffers, if our capital levels fall below the

prescribed buffer amounts, we must restrict capital distributions, such as stock repurchases and dividends, as

well as discretionary bonus payments to executives, until the buffer amounts are restored. The prescribed

capital buffers represent the amount of capital we are required to hold above the minimum leverage and risk-

based capital requirements. Compliance with the capital buffers will be required upon our exit from

conservatorship.

◦The prescribed leverage buffer amount (“PLBA”) represents the amount of tier 1 capital we are

required to hold above the minimum tier 1 leverage capital requirement;

◦The risk-based capital buffers consist of three separate components: a stability capital buffer, a stress

capital buffer, and a countercyclical capital buffer. Taken together, these risk-based buffers comprise

the prescribed capital conservation buffer amount (“PCCBA”). The PCCBA must be comprised entirely

of common equity tier 1 capital; and

•Specific minimum risk-weights, or “floors,” on single-family and multifamily risk-weighted exposures, as well as

retained portions of credit risk transfer transactions.

The table below sets forth information about our capital requirements under the standardized approach of the enterprise

regulatory capital framework. Available capital for purposes of the enterprise regulatory capital framework excludes the

stated value of the senior preferred stock ($120.8 billion) and other amounts specified in footnote 2 to the table below.

Because of these exclusions, we had a deficit in available capital as of December 31, 2023 and 2022, even though we

had positive net worth under GAAP of $77.7 billion and $60.3 billion as of December 31, 2023 and 2022, respectively.

We had a shortfall of $243 billion and $258 billion of our available capital (deficit) to the adjusted total capital

requirement (including buffers) of $188 billion and $184 billion under the standardized approach of the enterprise

regulatory capital framework as shown in the table below as of December 31, 2023 and December 31, 2022,

respectively.

Risk-weighted assets increased from $1,316 billion as of December 31, 2022 to $1,357 billion as of December 31, 2023,

primarily due to an increase in the countercyclical adjustment we are required to apply in the calculation of credit risk

weights for our single-family mortgage exposures under the enterprise regulatory capital framework and declining

property values in our multifamily book of business. The countercyclical adjustment is intended to stabilize our capital

requirements through home price cycles by adjusting mark-to-market LTV ratios for single-family mortgage loans when

national home prices are meaningfully above or below the long-term trend. These increases were partially offset by our

on-going credit risk transfer issuances, which reduce risk-weighted assets.

As of December 31, 2023 and December 31, 2022, our risk-based adjusted total capital requirement (including buffers)

represented the amount of capital needed to be fully capitalized under the standardized approach to the enterprise

regulatory capital framework.

Capital Metrics under the Enterprise Regulatory Capital Framework as of December 31, 2023(1)
(Dollars in billions)
Adjusted total assets		$4,552
Risk-weighted assets		1,357
		Amounts			Ratios
		Available Capital (Deficit)(2)	Minimum Capital Requirement	Total Capital Requirement (including Buffers)(3)	Available Capital (Deficit) Ratio(4)	Minimum Capital Ratio Requirement	Total Capital Requirement Ratio (including Buffers)
Risk-based capital:
	Total capital (statutory)(5)	$(34)	$109	$109	(2.5)%	8.0%	8.0%
	Common equity tier 1 capital	(74)	61	140	(5.5)	4.5	10.3
	Tier 1 capital	(55)	81	160	(4.1)	6.0	11.8
	Adjusted total capital	(55)	109	188	(4.1)	8.0	13.9
Leverage capital:
	Core capital (statutory)(6)	(43)	114	114	(0.9)	2.5	2.5
	Tier 1 capital	(55)	114	137	(1.2)	2.5	3.0

Capital Metrics under the Enterprise Regulatory Capital Framework as of December 31, 2022(1)
(Dollars in billions)
Adjusted total assets		$4,552
Risk-weighted assets		1,316
		Amounts			Ratios
		Available Capital (Deficit)(2)	Minimum Capital Requirement	Total Capital Requirement (including Buffers)(3)	Available Capital (Deficit) Ratio(4)	Minimum Capital Ratio Requirement	Total Capital Requirement Ratio (including Buffers)
Risk-based capital:
	Total capital (statutory)(5)	$(49)	$105	$105	(3.7)%	8.0%	8.0%
	Common equity tier 1 capital	(93)	59	138	(7.0)	4.5	10.5
	Tier 1 capital	(74)	79	158	(5.6)	6.0	12.0
	Adjusted total capital	(74)	105	184	(5.6)	8.0	14.0
Leverage capital:
	Core capital (statutory)(6)	(61)	114	114	(1.3)	2.5	2.5
	Tier 1 capital	(74)	114	137	(1.6)	2.5	3.0

(1)Ratios are calculated as a percentage of risk-weighted assets for risk-based capital metrics and as a percentage of adjusted total assets

for leverage capital metrics.

(2)Available capital (deficit) for all line items excludes the stated value of the senior preferred stock ($120.8 billion). Available capital (deficit)

for all line items except total capital and core capital also deducts a portion of deferred tax assets. Deferred tax assets arising from

temporary differences between GAAP and tax requirements are deducted from capital to the extent they exceed 10% of common equity.

As of December 31, 2023 and 2022, this resulted in the full deduction of deferred tax assets ($11.7 billion and $12.9 billion, respectively),

from our available capital (deficit). Available capital (deficit) for common equity tier 1 capital also excludes the value of the perpetual,

noncumulative preferred stock ($19.1 billion).

(3)The prescribed capital buffers represent the amount of capital we are required to hold above the minimum risk-based and leverage capital

requirements. The applicable buffer for risk-based common equity tier 1 capital, tier 1 capital, and adjusted total capital is the PCCBA,

which is composed of a stress capital buffer, a stability capital buffer, and a countercyclical capital buffer. The PCCBA must be comprised

entirely of common equity tier 1 capital. The applicable buffer for leverage tier 1 capital is the PLBA. The stress capital buffer and

countercyclical capital buffer are each calculated by multiplying prescribed factors by adjusted total assets as of the last day of the

previous calendar quarter. The stability capital buffer is based on our share of mortgage debt outstanding. The prescribed leverage buffer

for 2023 and 2022 was set at 50% of the 2023 and 2022 stability capital buffer, respectively. Going forward the stability capital buffer and

the prescribed leverage buffer will be updated with an effective date that depends on whether the stability capital buffer increases or

decreases relative to the previously calculated value.

(4)Ratios are negative because we had a deficit in available capital for each tier of capital.

(5)The sum of (a) core capital (see definition in footnote 6 below); and (b) a general allowance for foreclosure losses, which (i) shall include

an allowance for portfolio mortgage losses, an allowance for non-reimbursable foreclosure costs on government claims, and an allowance

for liabilities reflected on the balance sheet for estimated foreclosure losses on mortgage-backed securities; and (ii) shall not include any

reserves made or held against specific assets; and (c) any other amounts from sources of funds available to absorb losses that the

Director of FHFA by regulation determines are appropriate to include in determining total capital.

(6)The sum of (a) the stated value of our outstanding common stock (common stock less treasury stock); (b) the stated value of our

outstanding perpetual, noncumulative preferred stock; (c) our paid-in capital; and (d) our retained earnings (accumulated deficit). Core

capital does not include: (a) accumulated other comprehensive income or (b) senior preferred stock.

While it is not applicable until the date of termination of our conservatorship, our maximum payout ratio represents the

percentage of eligible retained income that we are permitted to pay out in the form of distributions or discretionary bonus

payments under the enterprise regulatory capital framework. The maximum payout ratio for a given quarter is the lowest

of the payout ratios determined by our capital conservation buffer and our leverage buffer. As a result of our capital

shortfall, our maximum payout ratio under the enterprise regulatory capital framework as of December 31, 2023 and

December 31, 2022 was 0%.

Restrictions on Capital Distributions and Dividends

Statutory Restrictions. Under the GSE Act, FHFA has authority to prohibit capital distributions, including payment of

dividends, if we fail to meet our capital requirements. If FHFA classifies us as significantly undercapitalized, the approval

of the Director of FHFA is required for any dividend payment. Under the Charter Act and the GSE Act, we are not

permitted to make a capital distribution if, after making the distribution, we would be undercapitalized. The Director of

FHFA, however, may permit us to repurchase shares if the repurchase is made in connection with the issuance of

additional shares or obligations in at least an equivalent amount and will reduce our financial obligations or otherwise

improve our financial condition.

Restrictions Relating to Conservatorship and Under Senior Preferred Stock Purchase Agreement. Consistent with the

prohibition on the payment of dividends in the senior preferred stock purchase agreement, the conservator eliminated

dividends on our common and preferred stock (other than the senior preferred stock issued to the U.S. Department of

Treasury described below) during the conservatorship. For additional information on the dividend provisions for our

equity instruments and the restrictions on our ability to pay dividends, see “Note 12, Equity.”

While not currently applicable, our payment of dividends and capital distributions will be subject to the following

restrictions under the enterprise regulatory capital framework effective on the date of termination of our conservatorship:

Restrictions Under Enterprise Regulatory Capital Framework. During a calendar quarter, we will not be permitted to pay

dividends or make any other capital distributions (or create an obligation to make such distributions) that, in the

aggregate, exceed the amount equal to our eligible retained income for the quarter multiplied by our maximum payout

ratio. The maximum payout ratio for a given quarter is the lowest of the payout ratios determined by our capital

conservation buffer and our leverage buffer. We will not be subject to this limitation on distributions if we have a capital

conservation buffer that is greater than our prescribed capital conservation buffer amount and a leverage buffer that is

greater than our prescribed leverage buffer amount. Notwithstanding the above-described limitations, FHFA may permit

us to make a distribution upon our request, if FHFA determines that the distribution would not be contrary to the

purposes of this section of the enterprise regulatory capital framework or to our safety and soundness. We will not be

permitted to make any distributions during a quarter if our eligible retained income is negative and either (a) our capital

conservation buffer is less than our stress capital buffer or (b) our leverage buffer is less than our prescribed leverage

buffer amount.