Given IRR, Don’t Rest Easy

FHFA has sent Congress its annual examination report on all of the GSEs. The discussion of GSE exposure to interest-rate risk (IRR) isn’t particularly new, but it’s especially worrisome given all the tremors in fixed-income markets of late. Fannie and Freddie can resort to Treasury should IRR run through their earnings – not so much to the Fed if it conspires with continuing liquidity challenges. Dallas may be the next FHLB on the merger firing line.