I absolutely do not understand how a financial planner, for example, could reco FNM or FRE stock when they haven't filed a financial stmt in two+ years. Secondly, I do not understand why they do not have an "E" after their symbol, which ANY, repeat ANY other company would have had they not filed proper financial stmts. These cos should be de-listed or be on a conditional listing (as would be indicated by the "E" suffix after their stk symbol)
IT's not the stock that's the real problem. These GSE's (which include the Federal Home Loan Bank and the Federal Farm Credit Bank) issue billions of dollars of heavily optioned debt - also know as derivative bonds - also known as toxic waste. They do this to pump up the balance sheets, spur growth and the balance sheets become huge, leveraged hedge funds.
The question posed by this editorial is the implicit backing of the the Federal Govenment of the debt.
Anyone remember Orange County, California 1994 and Robert Citron?
He took the county down the drain by bying boatloads of bonds from FHLB, FNMA and other GSE enterprises. What happened?
Well these GSE's didn't default on the debt. No. The debt was such toxic waste that a swift change in interest rates made the stuff sink in value. The GSE's didn't default they just issued debt that a supposedly sophisticated investor like Citron could understand. He couldn't.