Fannie Mae-No Politics (FNMA)

[Donotunderstand]

In February, the Obama administration laid out three broad policy options for the long-term restructuring of the GSEs: 1) full privatization of secondary mortgage markets; 2) privatization with an "emergency" federal guarantee that would kick in only in crisis situations; and 3) a system of insuring mortgage-backed securities through a number of federally chartered, private mortgage-bond insurance firms, or "private mortgage guarantors." These firms would put private capital at risk before a federal reinsurance backstop would kick in. In option 3, Wall Street sees yet another new profit center, with government protecting against losses.