Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

What does the federal government want out of this 'Partnership' with the GSES? (aka, What does Uncle Suggy Covet?)

Probably Primarily:

(1). A continuation of the Implicit Guarantee as that keeps the $7.5T in potential MBS Guarantees OFF the federal balance sheets.

(2). Lots of Capital to hedge against future rescues. But not so much as to make American Housing Finance Unaffordable.

(3). Safe and sound mortgage underwriting and well run GSES so the Federal Reserve can continue buying or selling GSE MBS in the future to contract or expand the US Economy and have some influence on the sometimes elusive long end of the yield curve.

(4). Some extraction from the GSES balance sheets to promote low and moderate income housing.

The problem that the prior administration had was that after the NWS depleted Capital to virtually ZERO, it would have been difficult (impossible?) to release the GSES quickly.