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Pastimes : Clown-Free Zone... sorry, no clowns allowed -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (126788)	10/2/2001 10:41:18 AM
From: Earlie	Read Replies (5) \| Respond to of 436258

Tradelite: Effectively, FNM "borrows short (money market) to lend long (mortgage acquisitions). Historically, this has been a prescription for a disaster. Suppose the Fed is forced to push rates up, (say as a result of a run on the buck, or a major sell-off of U.S. treasuries). FNM would be in massive trouble in a heart beat. Suppose as well that many folks in the U.S. lose their jobs and can no longer afford the house they just bought. If that happens with regularity, the bottom falls out of the real estate game, house prices fall dramatically, and the unemployed toss the keys to the mortgage holder and take a walk. This puts FNM between a rock and a hard place. Many folks think FNM is a govt. guaranteed scene. It isn't. When the poop gets into the prop, FNM is going to take it in the teeth. Best, Earlie