Today--I thought we learned from the chairman how
you you can steepen the curve and still bankrupt
Fannie Mae. Just halt the growth in the portfolio
so that Fannie is forced to mark the low coupon
increasingly long duration mortgages to market in
an increasingly high interest rate environment.
Couple this with no growth in the portfolio of
newer, higher yielding, securities and a slightly
higher funds rate and presto ---- Insolvency.