The federal bank and thrift regulatory agencies today announced that they are seeking comment on a proposal to permit banking organizations to assign a 10% (currently 20%) risk weight to claims on or guaranteed by Fannie Mae and Freddie Mac, including all credit exposures, such as senior and subordinated debt and counterparty credit risk exposures, but not including preferred or common stock. The FDIC will accept comments through November 26.  FDIC Release.

 Fannie Mae announced on October 29 that it has determined to take a valuation allowance against its deferred tax asset in an amount that is yet to be determined but which is likely to be substantially all of the value of the deferred tax asset as of September 30.  Fannie Mae Release

The Emergency Economic Stabilization Act provided banks and certain financial institutions ordinary treatment for gains and losses on direct investments in preferred stock of Fannie Mae and Freddie Mac. On October 29, the IRS issued Rev. Proc. 2008-64, which provides banks and certain other financial institutions the benefit of ordinary treatment on gains and losses that they are experiencing on certain indirect investments in this preferred stock.  IRS Rev. Proc. 2008-64.