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To: yard_man who wrote (126865)	10/2/2001 2:30:12 PM
From: Haim R. Branisteanu	Read Replies (1) \| Respond to of 436258

tippet, off balance sheet hedges were once very forcefully defended by various Gov. representatives but they are there. I know of a diversified hedge fund with apx. $2 billion in assets who leveraged itself at such extent that 1 bp was $60 million in profit or loss. Same with several banks there is always another side to the transaction who takes the risk. I do not disagree with you that FNM is dangerously leveraged and their profits are spread sensitive but between less earnings to ZERO earnings or substantial losses is a long way to go. Further one issue many ignore in their analysis is that if long rates go up so will go FNM collateral, and WS is salivating at issuing inverse floaters which will save FNM. Will not go in the technical discussion of inverse floater as it will take plenty of time to explain but in a simplistic it is similar to the anti matter of a bond <GGGG> BTW bonds and currencies can be leveraged at 1 to 20 in your margin account not like stocks 1 to 2.5