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The GSE Public-Private Hybrid Model Flunks Again: This Time It’s the Federal Home Loan Bank System (Part 1)

The Stoop (NYU Furman Center)

The F&F core business of securitizing and guaranteeing loans essentially takes the below-market cost of the funds raised by issuing mortgage-backed securities (MBS), which reflects the implied guarantee, and passes that subsidized cost through to primary market lenders. As an example of their lobbying power, in 2004 and 2005 the George W.

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Government Mortgage Interest Rates: A Serious Discussion about the Intertwined Topics of Risk Adjustment and Cross-subsidies

The Stoop (NYU Furman Center)

The FHFA, meanwhile, has stated that there is no intention to do such redistribution and that the changes resulted instead from updating the GSE risk adjustments, mostly set about a decade ago, to be consistent with the rule it adopted in 2020 for minimum required capital. 3 This business model is very complex. This claim is simply untrue.