Fannie Mae-No Politics (FNMA)

[NobodyFromNowhere]

The No News Story That is the Big Story.
If you remember, the Obama admin made a big deal about how Jack Lew was going to meet with Fed, Dimon, Blankfein, Moynihan, Stumpf, et al and discuss creating a benchmark private MBS. They'd create this new mbs security, and the fed could help make the market for it if their were no buyers (since they are able to still replace mbs runoff). Those meetings went very badly with no path forward. That is why there has been no token "private market" news drops and also why there has been the new relaxation, ie, Mel Watt, CSP owned by Fannie and Freddie, 3% down payments, HUD trust fund contributions. Really the only next step is to allow Fannie and Freddie to retain and build capital. The Greenspan method is to hold more capital in order to stave off a next crisis. That is the solution coming out of Basel; now the biggest banks are bigger and more systemically important, but they hold 3x as much capital as they did in 2007. That is really the only solution for Fannie and Freddie, with some minor business model and regulatory tweaks.