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To: pater tenebrarum who wrote (15688)	9/1/2000 11:13:44 PM
From: Ken98	Read Replies (2) \| Respond to of 436258

Heinz, to a certain extent they are supported by the US taxpayer, but in a strict legal sense most of this GSE debt like Fannie and Freddie is NOT supported by the full faith and credit of the US Gov't like general Treasury obligations. This is what Greenspan has been trying to remind everyone of, including apparently again this week in a letter to Congress. When it gets down to nut cutting time Congress may choose (probably for political reasons) not to honor the letter of some of these GSE obligations. My guess would be that the beneficiaries of some of those "guarantees" would be hit first - they would be paid in scrip rather than in cash. Some of these apartment loans they are doing lately aren't going to be pretty when the cycle reverses. A lot of these "non-profits" are taking huge fees (compliments of Fannie) just to come into a deal and lend their "name". The deals make no economic sense other than to generate fees for the developer and the non-profit. When the deal goes south the developer hands over the keys, most are non-recourse to the borrower. Have a good weekend, Ken.