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To: ild who wrote (189720)	8/27/2002 9:47:55 PM
From: ild	Read Replies (1) \| Respond to of 436258

10:53 AM AGENCY TALK: The Office of Federal Housing Enterprise Oversight announced today that both Fannie Mae and Freddie Mac passed the first application of the risk-based capital stress test and had excess risk-based capital. As of March 31, 2002, Fannie Mae's risk-based capital requirement was $20.228 billion. Fannie Mae's total capital of $26.290 billion on that date exceeded the risk-based capital requirement by $6.062 billion. However, Fannie Mae's higher minimum capital requirement of $24.571 billion was binding. As of March 31, 2002, Freddie Mac's risk-based capital requirement was $5.680 billion. Freddie Mac's total capital of $21.360 billion on that date exceeded the requirement by $15.680 billion. However, Freddie Mac's higher minimum capital requirement of $19.390 billion was binding. As of March 31, 2002, both Enterprises passed the stress test due to effective risk management including extensive interest rate hedging. Over the past three years since the risk-based capital rule was proposed, both Enterprises' use of derivatives increased dramatically. Fannie Mae's notional derivatives volumes rose 172 percent while Freddie Mac's volumes jumped 248 percent. The rule gives the Enterprises credit when they engage in effective risk management behavior. Freddie Mac's stress test results were especially strong because its hedges enabled it to maintain positive net interest income through nearly the full stress period in both interest rate scenarios. The OFHEO's analysis is likely to be seen positively by investors who own stocks and or bonds in the two agencies. Here is a link to the OFHEO's analysis.

To: ild who wrote (189720)	8/29/2002 4:35:21 PM
From: Mike M2	Read Replies (1) \| Respond to of 436258

Ild, the apologists for the low savings rate used to point to the huge capital gains of the public so there was no need to save. I suppose if you were short or owned gold you would have capital gains but not many people do that. Home equity is the last ( misplaced) hope. A major commercial property owner/ manager reported that the vacancy rate for Class A office space went from 10% last year to 15% - in Fairfield County . He noted it more from reduced demand rather than new supply . mike