Reflecting this, the Council of Financial Regulators has indicated that it would consider possible responses should lending standards deteriorate and financial risks increase. We are not at this point, but we are watching carefully. Conclusion I will conclude by briefly drawing the 3 themes together – the recovery, investment and the outlook for monetary policy.
In other words, the method of GSE financing most consistent with their missions is to securitize assets first and to hold in their portfolios only those assets that are very difficult or unduly expensive to securitize. as GSE debt was perceived, in effect, as higher-yielding Treasury debt. Accordingly, the effect on the financing of our current account deficit would likely be nil.