You’re On Your Own – Sort Of
As we noted last week, FHFA is barreling through the systemic rulebook, finalizing capital rules, proposing liquidity standards, and, now, laying out living-will requirements to ensure orderly GSE resolution under even acute stress.  Our in-depth review of the proposal reinforces our initial assessment:  FHFA intends that this proposal and the rules it demands withdraw the “effective” USG guarantee accorded the GSEs in 2008 by the FHFA director when the conservatorships were established that has ever since guided market perception.