By 2003, the GSEs' portfolios had grown tenfold, to $ trillion or 23 percent of the home-mortgage market. The almost unlimited low credit risk profit potential from exploiting subsidized debt has been available to the GSEs for decades.
Under the enhancement of the international G-SIB surcharge being developed by the Federal Reserve, the formula used to set risk-based capital surcharge levels for U.S. G-SIBs would incorporate each U.S. G-SIB’s reliance on short-term wholesale funding. Greater reliance on short-term wholesale funding leaves firms more vulnerable to runs that impose externalities on the entire financial system.