As previously proposed a few years back:

  1. Fund agencies (fnma/freddy) through the US Fed Financing Bank that funds directly with Treasury at Treasury rates.
    This lowers costs for the agencies that gets passed through to borrowers and removes liquidity issues for agencies.
    Shareholders are still at risk of mortgage defaults; so, market discipline is unchanged.
  1. Expand scope of the agencies to markets the Fed wants served – jumbos, etc.
    This eliminates the need for any kind of ‘repackaging’ .

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