Fannie Mae (FNMA)

[LuLeVan]

Do you deny that when the Fed sells its MBS holdings, it drives up interest rates?

Do you deny that when Fannie and Freddie buy MBS, it lowers interest rates?

The Fed doesn't sell its MBS because it wants to drive up mortgage rates. It's just an inevitable side effect of quantitative tightening, which includes selling off all the assets on the Fed's bloated balance sheet. The Fed may actually be happy with FnF buying the MBS, which helps to ensure that mortgage rates do not rise excessively.

Fannie and Freddie will not be able to purchase MBS until the conservatorship is terminated.

The Federal Reserve may or may not green light such an idea, but in theory it could object to it on the basis that a scenario could develop where...