Reply #3: well, the first mistake is that fnma is no longer a gse [View All]

they became an independent corporation over 30 years ago. they have a unique corporate charter that exempts them from local washington d.c. taxes as long as they continue to pursue the mission of promoting home ownership for families below a certain income threshold. as such, there is still some governmental control, but it's limited to theoretically threatening to revoke the charter.

i have never heard that holding government securities doesn't increase reserve requirements, but that certainly would make no sense for fnma.

also, fnma/gnma don't "own" 75% of the mortages. the majority of what they issue is securitized and sold to the private sector. much of the rest is merely guaranteed by fnma/gnma. they have to have some form of reinsurance and/or risk management portfolio to balance these risks. furthermore, if people start defaulting in droves, they would investigate, find certain lenders didn't adhere to the lending requirements 100%, and refuse to pay on the guarantees.

this is not to say that an fnma/gnma collapse is impossible if they're mismanaged. one hopes that they are being properly and thoroughly audited....