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http://www.zerohedge.com/news/2013-0...watchdog-finds
Obviously using a flawed methodology to count cash flows is beneficial to the bottom line and as a result, both Fannie and Freddie posted massive profits in the past quarter, which also resulted in dividends flowing into the US Treasury. Which worked great at a time when the US in turn, was also masking its true sad budgetary state and was pushing to delay the debt ceiling fight, facilitated by the additional inbound cash from the GSEs.
However, now that we have "moved on", the Taper is just around the horizon and the latest debt ceiling fight follows just after, and the Fed is actively thinking of permissive factor to untaper, especially once stocks plunge following the gradual reduction in monthly flow by the Fed and the realization that Bernanke may be pulling the training sheels, forcing the GSEs to "suddenly" admit their true state. What this will achieve is to change the direction in fund flows, and Fannie and Freddie will once again start to enjoy the benefit of tens of billions of inbound cash flows (i.e., a resumption of the old bailout regime) from the Treasury, which will be just what the Fed ordered, as this will have to be funded by more Treasury issuance, more Fed monetization, a return to the old $85 Bn/month in equity flow, more centrally-planned stock prices, and so on.
In other words, with the Taper already actively being priced in (although certainly not fully) for a catalyst on when the Untaper talk will start, look for the GSEs to return to their old sorry shape. That will be the warning light for when Fed will be actively contemplating how to boost monetizable deficit funding once more.
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