Fannie Mae-No Politics (FNMA)

[GAK-]

This appears to be the key paragraph from Tim Howard's post:

"In its request for input, FHFA states that Fannie and Freddie’s credit risk transfer programs “should consist of transactions in which the cost to the Enterprise for transferring the credit risk does not meaningfully exceed the cost to the Enterprise of self-insuring the credit risk being transferred.” Fannie’s CAS program badly fails this test. Fannie has committed itself to make billions of dollars in interest payments to purchasers of CAS risk-sharing securities that will absorb few if any credit losses, even in a stress environment. These deals are clearly, and grossly, uneconomic, and as it reviews its approach to evaluating future credit risk transfers FHFA must ask itself how it could have failed to detect that fact."

This appears to be where Tim Howard and Don Layton have a difference of opinion. Don Calculates the cost at around 7%. Tim does not give a percentage, but clearly sees the cost of these transactions as much higher.