[Southack]

I wouldn't get too concerned over FNMA getting into trouble. Each package of loans that FNMA buys is insured at least twice by two different insurers with entirely unrelated pools of cash funds backing them, plus the assets of the homes, plus the cash flow from all of the mortgage payments that do come in, plus they can liquidate both good and bad loan packages instantly on the open market in NYC.

Unless unemployment shoots up past 7.5% and interest rates shoot up past 9%, the government wouldn't even have to step in to give FNMA a helping hand.

On the other hand, changing their accounting rules could easily change the rules in mid-game, and cause everything to fail. Thus, advocating FNMA changes is probably the riskiest of all paths to advocate.

But hey, I'm a survivalist with food stocks, water storage, guns, ammo, and a plethora of survival equipment/gear, so what have I got to fear from people killing the goose that laid the golden eggs? Bring it on! Go change the rules on FNMA. I'm prepared for people such as you taking absurd actions such as that.

Are you??

[AdamSelene235]

This is the problem, it is the financial equivalent of holding a microphone too close to a speaker. Eventually you run out of gain.

1. Consumers obtain home mortgages from lenders.

2. Lenders sell mortgages to the GSEs or swap them for securities backed by the lenders' mortgages.

3. The GSEs generally bundle mortgages into mortgage- backed securities (MBS) and sell them to investors.(2)

4. With funds from the sale of the securities, GSEs buy more home mortgages from lenders.

5. With proceeds received from the GSEs for their mortgages or from the sale of the GSEs' MBS, the lenders make new loans to home buyers (i.e., cycle back to step 1).

This is precisely how you create a bubble. Read Von Mises, Hayek, Jim Rogers or even Soros (just don't read his political ramblings)