As we continue to assess pandemic effects across financial markets, we draw attention to one potentially problematic aspect of the GSEs conservatorship: no access to FRB emergency liquidity. This isn’t to say that Fannie or Freddie would go under, but Treasury would need to open its pockets to support not only capital shortfalls, but also and perhaps more immediately, any liquidity stress. Because they are not in conservatorship, these restrictions do not apply to the FHLBs.
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