27 February 2008

Loan Portfolio Limits Eased on GSEs. Disaster to Follow

As a result of their accounting scandals Fannie Mae and Freddy Mac had their portfolios capped about 725 billion dollars, but regulators have now removed the caps.

This is, to quote Nietzsche, "Like the bite of a dog into a stone, it is a stupidity".

The head of OFHEO, James Lockhart, will be eliminating the caps this week, and it looks like he will be reducing their capital requirements below the current 30% too.

Mr. Lockhart is an ass. At a time when the 2nd and 3rd largest borrowers in the world, after the US government, are facing a collapsing market, allowing them to go further out on a limb that is being sawed through is insane.

0 comments :

Post a Comment