Friday, September 5, 2014

Only US Treasuries and Fannie and Freddie MBS qualify

http://www.bloomberg.com/news/2014-09-05/banks-left-guessing-if-mortgage-bonds-liquid-under-rules.html?cmpid=yhoo

from fnma (fannie mae) google group:

Private Label MBS, Car Loan AB's, Credit Card AB's, Non-US Sovereigns, and Corporate Bonds do not qualify!  Only US Treasuries and Fannie and Freddie MBS qualify.


Absurd_Trader

Very important article on Bloomberg today, and very important rulings on Bank liquidity.  
Most people continue to not understand how important Fannie and Freddie MBS are in the 
US Banking systems.  Most people also don't understand that Banks hold on average 10% of Assets
 in Fannie and Freddie MBS in Order to Stay Liquid.  You mean, banks sell mortgages to Fannie and 
Freddie who bundle them up, and then the banks buy the same MBS?  The answer is yes.  
The Federal Reserve requires them to hold a large portion of their assets in highly liquid securities 
in order to be liquid in case you got it, there are large withdrawals from the bank. 
 Private Label MBS, Car Loan AB's, Credit Card AB's, Non-US Sovereigns, and Corporate Bonds do not qualify!
  Only US Treasuries and Fannie and Freddie MBS qualify.  
So, yes the entire banking system would not work without Fannie and Freddie MBS.  
That's what people like Corker, Warner, Crapo, etc don't realize.  
They worked with a small team, led by a guy that was a mortgage trader to re-write the banking system.  
Their bill does not work and is impossible to implement, just like half of the Dodd Frank regulation.  
Just ask Dimon and Blankfein. They'll tell you the same. 
 Notice that not one person who understands the banking system has come out publicly and 
said that Fannie and Freddie need to go.  People in the know have no idea how the system
would work without them.  Truth.





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