Zero Obesogens! Shrinking Portfolios! Bigger Footprints?! If Doomers aren’t totally confused by today’s reconfiguration of the US Treasury’s support for FHFA’s conservatorized housing GSE’s they’re doing better than we are. But if there’s one thing I am sure of, it’s that this classic performance is getting funnier (and more profound) every time I hear it:
Hat tip to twist for catching this early out of FHFA’s site. The MSM has been everywhere, but everywhere on this story today although to now (22:10 GMT) Google News Search returns exactly zero hits on “implicit guarantee”, so either they managed to find journalists who know exactly nothing about how we got here, or everyone got together and agreed what not to explore.
MarketWatch (8/17 ’12): “Treasury move to entrench Fannie, Freddie: Fannie, Freddie portfolios to be cut by 15% a year”
… Rep. Scott Garrett of New Jersey, who is chairman of the House Financial Services subcommittee that oversees the firms, said the move will “kick the can” on meaningful reform.
Well duh, that’s what it’s supposed to do, but I’m not convinced reading Treasury’s site that it’s doing it all that effectively (Doomers please remove all beveridges from mouth before reading the following):
Annual Taxpayer Protection Plan: To support a thoughtfully managed wind down, the agreements require that on an annual basis, each GSE will – under the direction of their conservator, the Federal Housing Finance Agency – submit a plan to Treasury on its actions to reduce taxpayer exposure to mortgage credit risk for both its guarantee book of business and retained investment portfolio.
Yikes! an annual report explaining how Enterprises with no capital will successfully stand between taxpayers and guarantees on $6 trillion of MBS, much from the bubble era. All I’ve got to say is if they get Stephen King to write these up, it’s not going to be HSBC’s chief economist 😉
If that was an effort to punt the problem past the Mayan Apocalypse, sure looks like the ball went off the side of their foot. UPDATE: Mainstream Media continue in Whiskey Tango Foxtrot? mode:
Of course OMB will somehow take the above and conclude, yet again, that Agency Debt isn’t a sovereign obligation of the US, which is a pretty funny, considering there’s nobody home …