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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: Spekulatius who wrote (81757)	6/19/2000 11:20:00 AM
From: Thomas M.	Read Replies (2) \| Respond to of 132070

re: FNM & FRE prudentbear.com prudentbear.com

To: Spekulatius who wrote (81757)	6/19/2000 12:46:00 PM
From: Knighty Tin	Respond to of 132070

Spek, They manage interest rate risk because they can borrow at close to Treasury rates, due to an implied govt. guarantee of their recklessness. If that implied guarantee is threatened, I doubt if either could borrow at investment grade rates. Also, the threat is not necessarily that they go belly up, but that their earnings cease to grow and actually decline rapidly. Which will happen in a recession, or when they are forced to compete in the real world, or when Greenspan decides to stop his "easy as Messalina" credit policies.