Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

When institutional investors shell out (especially banks) the $13T+ to buy Fannie Mae and Freddie Mac MBS, they do so knowing that Uncle Suggy implicitly guarantees the timely repayment of their principal.

That's why few investors are interested in PLMBS, NO IMPLICIT GOVERNMENT GUARANTEE!

The byproduct of this arrangement is that hard working American Families get access to the 30 yr PREPAYABLE AT ANY TIME FRM, AT SOME OF THE LOWEST INTEREST RATES.

Look at a typical US Bank Balance sheet. It consists of about 24% of federal agency debt and MBS (SVB had 57%).

This imbedded importance of Fannie Mae and Freddie Mac MBS as one of the backbones of the US Banking System means that it is extraordinary likely that the US government will make sure these investors don't lose their principal in F and F MBS.