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Politics : THE WHITE HOUSE

SPY 691.97

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Jan 30 4:00 PM EST

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To: TimF who wrote (23465)	10/7/2008 2:57:23 PM
From: DuckTapeSunroof	Read Replies (1) of 25737

Nothing 'questionable' about it at all! First of all, though: I ONLY SAID "30 year fixed rate mortgages". (I never said that there were not other 'secondary markets' for mortgage paper in general, apart from Freddie or Fannie!) Simply that the 30 year fixed did not exist as a viable commercial product prior to the Agencies getting tasked to CREATE such a market --- by issuing standards for 'conforming' 30 year term mortgages, and standing ready to buy up the paper. Did not exist prior to that, for the reasons I've already outlined: commercial banks were unwilling (because there was no business case to do so) to issue mortgages for such a long-term to individuals... (at least not without vastly higher rates which would also nullify the market case for them.) By the federally-sponsored corporations being tasked to create such a market by buying up the paper... banks could get a quick return on their capital (otherwise long mortgages would tie-up their capital and depress further lending), and continue lending.

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