When it comes to Fannie Mae/Freddie Mac’s future and the administration’s options for this, the Securities Industry and Financial Markets Association (SIFMA) last week was pushing for a guaranty that could be priced in a manner similar to what is seen in the derivatives market.

"We think it’s going to require a guarantee which the government’s going to have to give and we’re going to have to pay for,” Tim Ryan, president and CEO of the SIFMA. “How do you pay? You can go into the derivatives markets now and buy tail risk. If it’s very, very remote tail risk then you pay ‘X,’ if it is not remote you pay [more]. I would think it would be priced based on the environment in which you’re operating in.

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