John McLeod

Fannie's Tax Credit Sale to Goldman: No Deal

Fannie (under a nightmare "conservatorship" until it inevitably blinks out sometime down the road) is in effect back to its pre-1968 persona as a government department. It can no more legally sell its tax credits than we could have sold our DND-earned Air Miles on eBay. This is all about laundering public funds in such a way that Agency Debt can stay junior to treasuries. They're defending the ambiguity of the "effective guarantee." A side effect would have been Goldman and Buffett siphoning off something like a billion dollars risk free for their intermediation services. Thus the thief-in-the-night timing. It nearly worked this time, and next time it will.