Fannie Mae (FNMA)

[whipstick]

LOL
[e-mail]

The risk-sharing transactions that Fannie Mae and Freddie Mac were prodded into by their regulator earlier in the decade alleviate the ?downside? should the two experience delinquencies. But it also reduces their ability to earn more money. As Keefe, Bruyette & Woods notes in a new report: ?Risk-sharing results in premiums being shifted from the GSEs to the providers of credit risk protection, which includes bond investors, insurers and other providers of capital??

One might argue that if the Treasury Department realized it will be getting less money from the GSEs as part of the quarterly earnings sweep it might put an end to risk-sharing transactions. Of course, the veteran investment bankers running Treasury are more interested in policy, not profits?