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Severe Economic Downturn could Trigger GSE Bailout
Thursday, April 30, 2015
The Federal Housing Finance Agency reports that the two
government sponsored enterprises (GSEs) Fannie Mae and Freddie Mac might
together require government assistance of as much as $157.3 billion in the
event of an extremely severe economic downturn.
The figure comes as a result of a stress test mandated by the Dodd-Frank
Wall Street Reform and Consumer Protection Act for certain financial institutions
with more than $10 billion in assets, criteria which includes the two companies
which are in Federal conservatorship.
test, an annual requirement, is designed to determine whether an institution can
absorb losses as a result of hypothetical adverse economic conditions.
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