The mo ron thinks FnF need capital cushions like banks but banks are loaning more money than they have by ratios of 10 to 1 and higher. FnF don't loan any money they don't have and each loan they guarantee is collateralized in excess of the loan by real property. In a catastrophic senario where Real Property values fell by 20% across the board any loans they guarantee over 3 years old would still be right side up so looking at 10% of MBS guaranteed potentially being upside down by 20% maximum which equals 2% of of total MBS guaranteed. Even under such a radical contraction less than one half of the upside down loans would be foreclosed on so 1% or 100 to 1 capital cushion would be well in excess of what's necessary in a worst case scenario. Of course more than that would be in the GSEs bank accounts today if it weren't for the FnF deceivership and net worth swipe. Hey MC why not tell the truth since you're so independent, LOL!
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