Re: [A-List] Agencies Crisis

["annewilliamson" <annewilliamson@xxxxxxx>]

This issue was hot about three years ago.  Greenscam had raised rates, but
Fannie's CEO Howell Raines, a former official in the first Clinton
administration, had really upped the money pump for political reasons.
Greenscam was nervous, started making noises in Congress which Poole's
speech of today echoed.  The irony is that when the bubble popped, Greenscam
leaned on Freddie and Fannie himself.  And then the long bond issue Henry
raises below played it's part.  Now, apparently, it's all turning to custard
as this is hardly an opportune time for the Fed to remind one and all that
there is no federal govt guarantee.  However, Greenscam, according to his
most recent congressional testimony, is crossing swords with the White House
on tax cuts and the burgeoning deficit --- so perhaps Poole's speech today
is part of a larger political intrigue, though I have no hard facts to base
that upon - just a thought. -A.

----- Original Message -----
From: "Henry C.K. Liu" <hliu@xxxxxxxxxxxxxx>
To: <gang8@xxxxxxxxxxxxxxx>; <pkt@xxxxxxxxxxxxxxxx>;
<a-list@xxxxxxxxxxxxxxxxxxx>; <TheNewForum@xxxxxxxxxxxxxxx>
Sent: Monday, March 10, 2003 12:58 PM
Subject: [A-List] Agencies Crisis


> St. Louis Federal Reserve President William
> Poole said Fanny Mai and Ginni Mai may not be sufficiently capitalized
> to weather a financial shock and pose a risk to the financial system and
> U.S.economy.
>
> Neither is backed by the credit of the U.S. government and they
> "hold capital far below that required of regulated banking
> institutions," Poole said in a speech to an Office of Federal
> Housing Enterprise Oversight meeting. He added that the
> government should make clear it doesn't back the firms.
>
> This is related to the retirement of the long gov. bond and the the
> attempt by some to use agencies to replace the role long gov bons play
> in the credit market.  The Fed is serving notice that it does not stand
> behind the agencies which are up to their necks with credit derivative
> exposures to bypass capital requirements.
>
> Henry C.K. Liu
>
>
>

Attachment: Fannie Mae & the Fed - Crudele.doc
Description: MS-Word document