We Suspect Principal Reductions Are Reason Behind F&F’s Unlimited Funding
We’ve been keeping a close eye on the whole “Fannie and Freddie receive unlimited funding” thing since we first found out about it. As soon as we heard the news we knew there was more to Washington’s motive of providing the GSEs with unlimited funding than merely a way to calm the markets.
On Monday we updated our original post on the subject, adding the opinion of one former Treasury official (which coincided with ours) that the reason Fannie and Freddie were given the unlimited credit line was because in the near future their losses would add up to more than the $200 billion each were previously given.
