CMS Sept 2022
Internal Use Only
Credit Risk
Explicit Guarantee versus Implicit Guarantee • Explicit – GNMA (a unit of HUD), • Implicit – FNMA/FHLMC (via FHFA and the US Treasury Senior Preferred Stock Purchase Agreement), FHLB, Tennessee Valley Authority
US Agency Debt
• GNMA • FNMA • FHLMC
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Internal Use Only
Credit Risk
A bank’s due diligence process is a key safeguard to mitigating credit risk.
Banks should be able to demonstrate a professional level of credit analysis for all credit ‐ related (i.e. non ‐ US Treasury or explicitly supported) securities.
Per the Uniform Agreement on the Classification and Appraisal of Securities Held by Depository Institutions:
“The depth of analysis should be a function of the security’s risk characteristics, including its size, nature, and complexity. Individual security analysis should form the basis of any classification determination.”
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