Comments on: FRBNY custodial holdings of Agencies still falling, but at a slower pace http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/ Sat, 21 Nov 2009 16:40:10 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: bsetser http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112488 bsetser Fri, 12 Sep 2008 02:43:42 +0000 http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112488 Owning agencies -- which are more liquid and have less concentrated exposure to any one real estate market -- was generally thought to be safer for the banks than owning an equal amount of mortgages. Owning agencies — which are more liquid and have less concentrated exposure to any one real estate market — was generally thought to be safer for the banks than owning an equal amount of mortgages.

]]> By: Charles http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112485 Charles Thu, 11 Sep 2008 23:19:30 +0000 http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112485 If the Treasury is explicitly guaranteeing Agencies, it could actually mean that the Agencies are undervalued, Scott. After all, they have higher yields than Treasuries and now a guarantee identical to them. The next problem could be in FHA. In an answer to a question I posed, Tanta of Calculated Risk said that FNM and FRE mortgages are actually pretty carefully screened. But FHA, she said, maybe not so much. If the Treasury is explicitly guaranteeing Agencies, it could actually mean that the Agencies are undervalued, Scott. After all, they have higher yields than Treasuries and now a guarantee identical to them.

The next problem could be in FHA. In an answer to a question I posed, Tanta of Calculated Risk said that FNM and FRE mortgages are actually pretty carefully screened. But FHA, she said, maybe not so much.

]]> By: Scott http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112481 Scott Thu, 11 Sep 2008 22:23:43 +0000 http://blogs.cfr.org/setser/2008/09/11/frbny-custodial-holdings-of-agencies-still-falling-but-at-a-slower-pace/#comment-112481 Commercial banks owning significant portfolios of Agencies seems like a severe concentration of risk, given that most commercial banks have exposure to residential mortgages through their own operations. Commercial banks owning significant portfolios of Agencies seems like a severe concentration of risk, given that most commercial banks have exposure to residential mortgages through their own operations.

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