FHFA: Time for Fannie and Freddie to Plan for Climate Risk ?
Mike SP
The onset of hurricane season is always a good time to reflect on the risks posed by climate change. That’s especially true this year, with reports of historically high sea surface temperatures in the Atlantic and the wobble from El Niño to La Niña conditions in the Pacific.
So, no one should be surprised that the Federal Housing Finance Agency issued an advisory bulletin last week requiring Fannie Mae, Freddie Mac and their joint venture, Common Securitization Solutions, to come up with plans to manage climate risk. If nothing else, the last few hurricane seasons (and fire seasons and summer droughts) have taught us the close connection between the vagaries of climate and housing.
The AB has five parts: governance, risk identification and management, key metrics, scenario analysis and risk reporting. Each of them will be a challenge for the government-sponsored enterprises.
For the rest of the story, see the new edition of Inside The GSEs, now available online.