In a speech today largely focused on global macroprudential policy, FRB Vice Chairman Fischer reiterated Fed fears about implicit guarantees, suggesting that any continued role for Fannie, Freddie, and the FHLBs at anything like their current size should be backed with an explicit guarantee so that risks are recognized and costs anticipated.  One cost he doesn’t mention is the one we analyzed for you yesterday:  that to the Fed if GSE reform proceeds in a disorderly fashion and the Fed gets stuck with a big book of GSE RMBS backed by who knows whom when.

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