Today, the Federal Housing Finance Agency (FHFA) announced that it is seeking comment on a proposed rule that would amend the Suspended Counterparty Program (SCP) regulation.
The SCP regulation requires any of FHFA’s regulated entities to submit a report to FHFA if the regulated entity becomes aware that an individual or institution with which it does business has been found to have committed certain forms of misconduct within the past three years. It also authorizes FHFA to issue orders directing the Agency’s regulated entities to cease or refrain from doing business with certain counterparties, subject to terms as provided in the orders. Final suspension orders are published on FHFA’s website.
“Amending the Suspended Counterparty Program will help strengthen FHFA’s ability to protect its regulated entities from business risks presented by individuals or institutions who engage in misconduct,” said Director Sandra L. Thompson. “The proposed rule will strengthen FHFA’s ability to ensure the regulated entities remain safe and sound so they continue to serve as reliable sources of liquidity.”
Specifically, the proposed rule would authorize the suspension of business between the regulated entities and counterparties who are found to have committed misconduct in the context of civil enforcement actions or who are found to have committed criminal or civil misconduct in connection with the management or ownership of real property. In addition, the rule would authorize FHFA to, immediately and without first issuing a proposed suspension order, suspend business between the regulated entities and counterparties where the misconduct has resulted in debarment, suspension, or limited denial of participation imposed by a federal agency.
FHFA invites comments on the proposed rule within 60 days of its publication in the Federal Register. Comments on the proposed rule should be submitted electronically or via mail to the Federal Housing Finance Agency, Office of General Counsel, Attention: Comments/RIN 2590-AB23, 400 7th Street, S.W., Washington, D.C., 20219.