Fannie Mae-No Politics (FNMA)

[bcde]

"Basel III set standards for what qualifies as capital for Financial Institutions larger than $50 B. Calabria has included bank fortress standards for FnF who are, predominantly, monoline insurers with way lower risk of default or insolvency."

Calabria and his expert advisers think that mono line insurance business is far riskier than multi product business.

But Calabria will not explain why FnF losses were far less than other private FIs in 2008.

Calabria does not understand the basic principles of business risks. Risk does not depend on the type of business but on how that business is managed. Any amount of large capital makes no difference if that business is not managed properly.

If FHFA conservatorship keeps on stealing all the capital of FnF, then how large capital is enough? Even a $100T capital is not enough.

If FnF are asked to provide unlimited liquidity to markets like in 2008 then how large capital is enough? Even a $10T capital is not enough.

Any business needs to be managed based on the available capital and not the other way around. If FnF do not have capital then reduce their risk exposure to match the capital. But FHFA wants to load FnF with unlimited risk exposures and then demand that FnF raise large capital to match the risk.

Currently half knowledged Calabria is the biggest risk for FnF and economy.