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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: CalculatedRisk who wrote (48566)	3/24/2006 1:28:30 AM
From: mishedlo	Read Replies (1) of 116555

China does not plan to emulate U.S. GSEs - adviser today.reuters.com Thu Mar 23, 2006 9:08 AM ET "The Chinese are adamant about having private sector mortgage lenders that are not reliant on government subsidies," the former regulator of the two U.S. government sponsored enterprises (GSE) told a bond conference in Italy. Falcon said Freddie and Fannie were created during the Depression in the 1930s, and Americans are still living with their unintended consequences. "The unintended consequences are their portfolios create systemic risk to the financial system," Falcon told Reuters on the sidelines of the conference. Freddie and Fannie hold a combined $1.4 trillion in mortgage portfolios. Senator Richard Shelby, a Republican from Alabama, along with the Federal Reserve and the White House argue that the portfolios pose a risk to the financial system of the world's largest economy by aggregating interest rate risk, and requiring the two listed companies to engage in extensive and complicated hedging.

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