Fannie Mae-No Politics (FNMA)

[Robert from yahoo bd]

I'm all for anything that would end this 15+ year saga in a positive manner for Shareholders.

Given the importance of Fannie Mae and Freddie Mac to the smooth functioning of the US Housing Finance Market and just like the federal government regulators for the TBTF banks, right now, the federal regulations believe "more Capital is better".

With signatures from Sandra Thompson and Janet Yellen, Fannie Mae and Freddie Mac's Capital Ratios could be doubled, removed from conservatorship, and given the green light to build their Portfolios and buy MBS.

The Federal Reserve CAN CONTROL US Short term interest rates, no question about it. Historically and today the Federal Reserve believes that US long term interest rates are controlled by Investor Expectations about the future rate of Inflation, which the Federal Reserve tries to keep within a range, but cannot directly control.

If it is true, that massive purchases/sales of MBS lower/increase the 10 year Treasury and vice versa, if you were the Federal Reserve, would you sign off on a deal that could possibly interfere with your Monetary Policy?