p.9 of fact sheet:
"As of September 30, 2019, the combined Enterprise CET1 capital requirement would have been $76 billion (4.5 percent of RWA) and the tier 1 risk-based capital requirement would have been $101 billion (6 percent of RWA)."
so forgetting about capital buffers for a moment (which restrict dividends and exec bonus payments), why is this stringent? looks reasonable. what am I missing?
yes $76bn is the most bullish case which would be solid news. however i think there's also likely a restraint on the leverage ratio side. they need $152bn (89 + 63) of tier 1 capital for their leverage ratio (excluding buffer), see page 231 and 232. subtract out a reasonable component for preferred and maybe that minimum non-buffer common requirement is 100-125bn vs the 76bn you cite.
well, I am still in the fact summary...it will be a long time until I get to p. 231. leverage test (p.3) is "The proposed rule would establish a minimum leverage requirement of 2.5 percent of an Enterprise’s adjusted total assets..." so I dont see that being a problem. p.9: "The adjusted total capital requirement of $135 billion would have represented 2.22 percent of adjusted total assets..."
spoiler alert: 2.5pct of 6.1trn of adjusted assets is $152bn.
so I shot ahead to p. 231 and see that for fannie, risk based and leverage capital requirements are $81B and $89B respectively, not taking into account buffers. this seems reasonable
I have read that bonuses and dividends will be limited if buffers are not met...has anyone read in this release where it discusses how limited?