So far, we’ve assessed an array of strategic and market-structure issues raised by FHFA’s capital proposal.  Before turning to the most critical question of all – could this capital framework really bring the GSEs out of conservatorship – we turn to another that determines whether Congress will let FHFA do so:  how this capital framework affects affordable housing.  In general, we see the rules as a mild boost to higher-risk single-family mortgages due to the rule’s uncertain risk sensitivity, but the NPR is complex and so many other factors determine asset allocation that we are loathe to opine.

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