With every week bringing a fresh wave of bad news about the collapse of the subprime mortgage market, one player that could benefit greatly from the distress is Ginnie Mae, which could potentially reverse years of declining new issuance as borrowers flee out of subprime back into the world of government-insured mortgages.

Moody's Investors Service recently downgraded or put on negative ratings watch some 267 mortgage-backed securities originated last year and backed by subprime second-lien mortgage loans, marking the latest blow for a subprime market that has been floundering for months. Some major Wall Street players could get seriously burned as a result, with an internal hedge fund run by Bear Stearns reportedly facing massive losses due to mortgage securities-related bets.

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