Freddie Mac has just announced its largest insurance risk-share to date, while Fannie last week finalized another actual-risk transfer at increasingly skinny cost to the GSE. All of these deals are of course prompted by policy-makers and growing success has lead Freddie now to style itself a “buy-and-sell” firm, while Fannie a week ago donned the moniker of a “holder and mover.” Last week, we assessed this shift in light of recent transactions, leading several of you to request a more in-depth analysis of the policy and structural issues raised by the GSEs’ gradual transition into totally transformed companies – all done without the stroke of a statutory pen or even much public notice. Here, we step back from our transaction-by-transaction assessment of each of the risk-shares to put them into the broader policy and market context.
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