Fannie overseer to lower required capital surplus
NEW YORK (Reuters) - Fannie Mae's regulator on Tuesday said it lifted a 2006 consent order placing limits on America's largest home finance company after the firm fixed problems tied to an accounting scandal.
The Office of Federal Housing Enterprise Oversight (OFHEO) also said it intends to further reduce the capital surplus requirement it placed on Fannie Mae upon successful completion of its capital-raising effort.
Fannie Mae was compelled by its regulator to hold extra capital as a result of the accounting troubles.
Fannie Mae on Tuesday said it would raise $6 billion in new capital through public securities offerings. The company reported its third quarterly loss and said it expects severe U.S. housing market weakness to continue in 2008.
OFHEO said it aims to lower the surplus capital Fannie Mae must retain to 15 percent from 20 percent after the latest capital-raising is completed.
Another reduction is planned in September "based upon the company's continued commitment to maintain capital well above OFHEO's regulatory requirement and no material adverse changes to ongoing regulatory compliance," the regulator said in a news release.
The surplus requirement was reduced from 30 percent in mid-March.
(Reporting by Lynn Adler; Editing by Jonathan Oatis)
