By law, banks cannot make additional banking acquisitions if the resulting firm would control more than 10 percent of U.S. insured deposits. 10  This comparison excludes the temporary 30 percent additional capital currently required by OFHEO because of the operational risks posed by the GSEs’ recent accounting problems.
11  Interest rate risk depends on the degree of hedging, which is at the discretion of firm management. However, because the GSEs’ portfolios are concentrated in the mortgage-backed securities market and thus are subject to rapid changes in market value, the risk profile of the GSEs can change rapidly in response to unexpected movements in interest rates.