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Proposal Would Scale Back GSE Advantage

The third consultative paper issued by the Basel Committee - like an earlier draft of the proposed international capital rules - appears to eliminate the more favorable regulatory risk weighting currently afforded to government-sponsored enterprises for their debt, equity and mortgage-backed securities, according to Federal Financial Analytics Inc., Washington.

The proposal, like an earlier draft, "would almost surely lead U.S. and international bank regulators to treat all of the housing GSEs as if they were corporate entities," according to FFA's "GSE Activity Report."

Fannie Mae and Freddie Mac did not have comment at press time.

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