In this alert, we assess the impact of the Fed’s new balance-sheet policy not on the pricing of GSE RMBS – not our bailiwick – but on the safety and soundness of Fannie and Freddie. We also look at the impact that the very, very gradual sell-off – to what is likely then still to be a big Fed book – will have on the overall structure of the U.S. residential-mortgage market.  Implications for Congressional action are also assessed.

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