Tuesday, December 30, 2008

Please let this be a joke!

Don Luskin points out what must be a very bad joke on the New York Federal Reserve web site. OUR Federal Reserve is trying to assure us that our investment in mortgage backed securities is secure because they are guaranteed by...drum role, Fannie Mae.

From the New York Fed's web site, part of an FAQ explaining the central bank's new program to buy mortgage-backed securities:
Does the agency MBS program expose the Federal Reserve to increased risk of losses?

Assets purchased under this program are fully guaranteed as to principal and interest by Fannie Mae, Freddie Mac, and Ginnie Mae, so the Federal Reserve's exposure to the credit risk of the underlying mortgages is minimal.