Long Term Capital

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VIEWPOINT: The Wrong Way to Think About the Fate of the GSEs

Sep 17, 2009By

A big topic in MBS markets right now is the scheduled end of the Fed’s pass-through and agency debt purchase programs at year end. But the elephant in the room is the fate of Fannie and Freddie. To a degree not well understood in the public discussion, the Fed’s purchases have replaced the GSE portfolio purchases that in the past helped to maintain a floor on MBS pricing in periods of peak supply and high market volatility (and consequently a ceiling on mortgage loan rates).

3d rendering of a row of luxury townhouses along a street

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