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Inside The GSEs

August 20, 2008

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First Regulatory Priority for GSEs: Capital

The single most pressing issue before the new regulator of Fannie Mae and Freddie Mac is to ensure the GSEs have enough capital to survive a market that is increasingly trying to sink them, according to a number of analysts and observers. Investors drove Fannie and Freddie stock prices toward untenable levels early this week as speculation grew that the U.S. government will have to use its new... Read More

FHLB Earnings Continue to Defy Gravity

The Federal Home Loan Banks are among the few institutions in the mortgage market that are actually making money these days. System-wide, the FHLBank cooperatives announced a combined net income of $718 million, an increase of 2.9 percent from the $697 million earned during the first quarter, and up 14.3 percent compared with the same period the year before, according to the FHLBank Office... Read More

Treasury Preps to Deploy GSE Backstop, Just in Case

The Treasury Department took the first steps in preparing to come to the aid of Fannie Mae and Freddie Mac, as it asked Wall Street investment bank Morgan Stanley to assess the GSEs and their vulnerability last week. Treasury Secretary Henry Paulson has said repeatedly that he does not expect to use the emergency backing powers granted by the omnibus housing act signed into law in late... Read More

Mudd, Syron Still in Charge Despite Massive Losses

Over the last four consecutive quarters, Fannie Mae and Freddie Mac have lost a whopping $14.2 billion between the two of them and their market capitalization has eroded. Yet, Fannie President and CEO Dan Mudd and Freddie Chairman and CEO Dick Syron continue at their respective helms, when better performances during this tough market have cost other CEOs their corporate heads... Read More

SIFMA Green Light Could Boost Jumbo Market

The Securities Industry and Financial Markets Association has relented – to a degree – on its earlier decision to keep the so-called conforming jumbo mortgages out of the To-Be-Announced mortgage-backed securities market, in response to lobbying by some key industry players and a leading member of Congress. Last week, SIFMA announced a compromise posture on the issue, saying newly... Read More

CA, FL, IL are Favorite Markets for GSE Lenders

California is the market of choice for the top seven lenders that provided mortgage loans for Fannie Mae and Freddie Mac securitization programs, according to a detailed new analysis of data from the first half of 2008 by Inside Mortgage Finance, an affiliated newsletter. The Golden State provided $98.84 billion in mortgages for Fannie and Freddie during that... [Includes one chart] Read More

Affordable Housing to Have Larger Role, Eventually

All the GSE talk these days seems to be about poor earnings, plunging stock prices, negative outlooks, diminishing capital, federal bailouts, and nationalization versus privatization. But assuming Fannie Mae and Freddie Mac make it through the latest tempest, affordable housing is expected to assume a larger role than has been the case under the previous regulatory regime... Read More

Market Sends Mixed Signals on GSE Debt Issuance

Investors have been giving conflicting messages regarding their interest and evaluation of Fannie Mae, Freddie Mac and Federal Home Loan Bank debt. The latest mixed signal: This week, Freddie found more than enough investors for its $3 billion five-year Reference Note security. “The deal was... [Includes one chart] Read More

News In Brief

Bacino Urges FDIC Caution On FHLBank Advances: The Federal Deposit Insurance Corp. was warned last week against implementing... Insurers Not Threatened By Big GSE Exposure: U.S. insurance companies have a collective $371 billion investment in securities... Fannie, Freddie Spent $3.57 Million To Lobby in First Quarter ‘08: Fannie Mae and Freddie Mac spent a combined $3.57... Read More

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