Markets of course remain volatile and unsettled in the wake of S&P’s Friday USG downgrade. Here, we assess the near-term impact of this action on Fannie, Freddie, the FHLBs and the mortgage market that so heavily relies on all of them. Conclusion: nothing disastrous in the near-term – or, at least nothing more disastrous than the situation we’re already in. But, the downgrade doesn’t make getting out of this hole any easier.

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