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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Perspective who wrote (85964)3/27/2001 2:50:41 AM
From: patron_anejo_por_favor  Read Replies (2) of 436258
 
Fannie Mae goes a-yackin' on the Hill:

nytimes.com

This part sounds like complete and unwashed bull$hit:

Fannie Mae said it also passed an interim version of a capital stress test -- it would survive under models assuming depression-like economic conditions for 10 years. The test assumes interest rates six percent higher than the current level and no new business for a decade.

Notice that they don't address what happens with a high level of repayment failures/delinquincies and foreclosures coupled with increased prepayments...a situation that might be seen were rates to fall, as in a deflationary recession. The biggest threat is to their clearly inadequate reserves relative to the loans they (and inferentially, "we" the taxpayers) are guaranteeing. That's the biggest threat to FNM...and it appears to be ignored (?intentionally) in their risk modeling.
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