FHFA proposes amendments to strengthen Suspended Counterparty Program
On July 7, the FHFA issued a notice of proposed rulemaking and announced that it is seeking feedback on a proposed rule to amend the Suspended Counterparty Program (SCP) regulation. The SCP regulation currently requires FHFA-regulated entities to report to FHFA if they became aware of certain forms of misconduct committed within the past three years by individuals or institutions they do business with. The SCP regulation also grants FHFA the authority to issue orders directing the regulated entities to cease or refrain from doing business with certain counterparties.
According to FHFA Director Sandra L. Thompson, the proposed rule aims to strengthen FHFA’s ability to protect its regulated entities from business risks associated with misconduct, enabling them to continue serving as reliable sources of liquidity. The proposed rule would specifically authorize the suspension of business between regulated entities and counterparties who are found to have committed misconduct in the context of civil enforcement actions in connection with the management or ownership of real property. Furthermore, the proposed rule would allow FHFA to immediately suspend business without prior notice when misconduct has resulted in debarment, suspension, or limited denial of participation imposed by a federal agency. Comments on the proposed rule are due within 60 days of publication in the Federal Register.