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Federal Register / Vol. 86, No. 84 / Tuesday, May 4, 2021 / Rules and Regulations
receivership estate and a newly established LLRE.
Advance information, strategic analysis, and action, where appropriate, would also support other important goals of a rapid and orderly Enterprise resolutionto minimize disruption in the national housing finance markets, preserve Enterprise franchise and asset value, and ensure creditors bear losses in the order of their priority.22 These goals work in concert, since a disruption of national housing finance markets also could increase costs to FHFA as receiver to the detriment of claimants on an Enterprises receivership estate.
Likewise, transparency in the Enterprises resolution planning process, including a proposed requirement that each Enterprise resolution plan contain a public section that FHFA would publish, would further another important policy goalfostering market discipline.
In addition to the substantive requirements of Enterprise resolution plans, the proposed rule addressed procedural requirements related to resolution planning, including the dates for submission of initial and subsequent resolution plans; FHFA review of and feedback on Enterprise resolution plans, including identification and notice of any deficiencies; requirements related to submission of revised resolution plans, to address identified deficiencies; the confidential treatment of all information that is not included in the plans public section; and identification of the resolution planning rule as a prudential standard. In addition, FHFA
clarified that neither the Enterprise resolution planning rule nor any resolution plan would give rise to rights of third parties and did not limit actions FHFA may take as receiver. FHFA
retains all discretion conferred by statute or rule on the agency when acting as receiver for an Enterprise.

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II. Discussion of Comments and Agency Response A. Overview of Comments Received FHFA received 14 comments on the proposed Enterprise resolution planning rule, which included comments from each Enterprise, the Mortgage Bankers Association, the American Bankers Association, the National Association of Home Builders, the Housing Policy Council, the National Association of Realtors, the Center for Responsible Lending, and the Heritage Foundation, 22 Advance
action could include, for example, ensuring that certain arrangements master netting agreements related to qualified financial contracts, for example are resilient to the creation of and transfer of assets to an LLRE.

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as well as comments from five individuals including a former Chief Executive Officer of Freddie Mac. Most comments were supportive of resolution planning generally and many suggested areas where the proposed rule could be improved or clarified.
Many supportive comments expressed the view that efforts by FHFA to improve supervision of the Enterprises as demonstrated through the recent Enterprise capital final rule, a recently proposed Enterprise liquidity rule, and this resolution planning rulemaking did not obviate the need for housing finance reform legislation. Some comments focused considerable attention on elements for legislative reform, which are beyond the scope of FHFA rulemaking. Other commenters addressed the need for additional FHFA
rulemaking in conjunction with resolution planning, such as a potential rule on total loss absorbing capacity TLAC, which is also beyond the scope of this rulemaking.23
Comments received and FHFAs responses are summarized by topic below. In general, however, many commenters raised questions about FHFAs approach to support provided to the Enterprises through the PSPAs with Treasury. While most of these commenters generally supported FHFAs proposal to prohibit the Enterprises from assuming the provision or continuation of extraordinary government support, many requested clarification about what that assumption meant, in terms of how the Enterprises and the broader market should consider the existing PSPAs for purposes of Enterprise resolution planning.
Commenters also addressed the proposed definition of core business line and the process for identifying CBLs; identification of impediments to rapid and orderly resolution; the benefit of a shortcomings category for supervisory concerns about a resolution plan that do not rise to the level of a deficiency; reduction of burden; and some rule processes.
B. Purpose of the Rule; Rapid and Orderly Resolution Priority of Objectives. FHFA proposed to require the Enterprises to develop credible plans to facilitate their rapid and orderly resolution by FHFA
as receiver, and proposed to define a credible plan in part as one that plausibly achieves the purpose of the 23 As noted in the preamble to the proposed rule, FHFA is considering the utility of a separate rulemaking that would require each Enterprise to maintain minimum amounts of loss-absorbing capacity such as subordinated or convertible longterm debt. See 86 FR at 1329, n.26.

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rule.24 The purpose of the rule, also set forth in the proposal, is to require each Enterprise to develop a resolution plan to facilitate its rapid and orderly resolution using FHFAs receivership authority in a manner that: 1
Minimizes disruption in the national housing finance markets by providing for the continued operation of the CBLs of the Enterprise in receivership by a newly constituted LLRE; 2 preserves the value of the Enterprises franchise and assets; 3 facilitates the division of assets and liabilities between the LLRE
and the receivership estate; 4 ensures that investors in mortgage-backed securities guaranteed by the Enterprises and in Enterprise unsecured debt bear losses in accordance with the priority of payments established in the Safety and Soundness Act, while minimizing unnecessary losses and costs to these investors; and 5 fosters market discipline by making clear that no extraordinary government support will be available to indemnify investors against losses or fund the resolution of an Enterprise.25
One commenter observed that the five objectives of Enterprise resolution planning could potentially be competing priorities. To assist the Enterprises in the development of credible plans, that commenter suggested FHFA should clarify the priority of the objectives. The commenter also advocated for the flexibility to submit a resolution plan with optional strategies that reflect relative weighting of the rules objectives, because different, reasonable, strategies could provide optionality to FHFA in any receivership scenario. If optional strategies were provided in a resolution plan, FHFA could evaluate whether the Enterprise demonstrated that one strategy achieves such purposes better than the other reasonable strategies it analyzed.
FHFA recognizes that there is some tension among the objectives set forth in the proposed rule. After consideration, however, FHFA has determined not to prioritize among them in this rulemaking. The priority of these objectives may change over time or in a particular resolution scenario, which argues against establishing a priority structure in a rule. FHFA also believes that, as drafted, the rule provides flexibility to an Enterprise to consider, offer, and explain prioritization of objectives, tradeoffs among the objectives that the Enterprise considered in proposing a resolution strategy or 24 See 12 CFR 1242.1, 1242.2, and 1242.4a1, 86
FR at 13421344.
25 Id., 1242.1, 86 FR at 1342.

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