An analysis of the systemic risks posed by Fannie Mae and Freddie Mac and an evaluation of the policy options for reducing those risks

Fannie Mae and Freddie Mac are government-sponsored enterprises that are central players in U.S. secondary mortgage markets. Over the past decade, these institutions have amassed enormous mortgage- and non-mortgage-oriented investment portfolios that pose significant interest-rate risks to the companies and a systemic risk to the financial system. This paper describes the nature of these risks and systemic concerns and then evaluates several policy options for reducing the institutions’ investment portfolios. We conclude that limits on portfolio size (assets or liabilities) would be the most desirable approach to mitigating the systemic risk posed by Fannie Mae and Freddie Mac.

"China's Energy Security: National Security, Ecological Balance and Regional Co-operation"

This paper analyzes both global and regional approaches to solving problems of energy security and ecological imbalance by addressing specifically the problems of China's energy security. PRC's growing energy dependence has become a major concern for both economic and national security policymakers in that country. The ambitious goal of modernization of the economy along the lines of the other newly industrialized economies(NIEs) of Asia has succeeded only too well, and it is difficult to reorient economic priorities. If examined rigorously, such an economic strategic assumption can be seen to entail the goal of creating further technological capabilities. In particular, China seems to be firmly committed to the creation of a largely self-sustaining innovation system as part of a knowledge-based economy of the future. Such innovation systems, called positive feedback loop innovation systems or POLIS have been created by advanced countries, and NIEs such as South Korea and Taiwan are proceeding to create these as well. But this will add to its energy burden and further dependence on the US as the power which controls the key sea lanes. Only a strategic reorientation to building a self-sustaining POLIS and appropriate regional cooperation institutions can lead to the way out of the current dilemma for China.

The interaction of Trypanosoma congolense with endothelial cells

Factors which affect adhesion of cultured Trypanosoma congolense bloodstream forms to mammalian feeder cells have been examined. Using an in vitro binding assay, the initial events following interaction of trypanosomes with bovine aorta endothelial (BAE) cells were monitored by both light- and electron microscopy. Metabolic inhibitors and other biochemicals were incubated with either cells or parasites, to test whether any inhibited the process. Our findings suggest that adhesion of the parasites is an active process requiring metabolic energy from the trypanosomes, but not from endothelial cells. We also provide data suggesting that T. congolense bloodstream forms possess a lectin-like domain, localized at distinct sites on their flagellar surface, which interacts with specific carbohydrate receptors, most likely sialic acid residues, on the endothelial cell plasma membrane. We also suggest that the cytoskeletal protein actin is probably involved in this interactio

Why do borrowers pledge collateral? new empirical evidence on the role of asymmetric information

An important theoretical literature motivates collateral as a mechanism that mitigates adverse selection, credit rationing, and other inefficiencies that arise when borrowers hold ex ante private information. There is no clear empirical evidence regarding the central implication of this literature—that a reduction in asymmetric information reduces the incidence of collateral. We exploit exogenous variation in lender information related to the adoption of an information technology that reduces ex ante private information, and compare collateral outcomes before and after adoption. Our results are consistent with this central implication of the private-information models and support the empirical importance of this theory.

Some Combinatorial Properties of Hook Lengths, Contents, and Parts of Partitions

This paper proves a generalization of a conjecture of Guoniu Han, inspired originally by an identity of Nekrasov and Okounkov. The main result states that certain sums over partitions p of n, involving symmetric functions of the squares of the hook lengths of p, are polynomial functions of n. A similar result is obtained for symmetric functions of the contents and shifted parts of n.Comment: 20 pages. Correction of some inaccuracies, and a new Theorem 4.

Resolving large financial intermediaries: banks versus housing enterprises

This paper examines the policy issues with respect to resolving the possible failure of housing enterprises Fannie Mae or Freddie Mac. The authors compare and contrast these issues with those raised in the context of large bank failures and also identify important differences in the extant supervisory authorities. Based on these discussions, they offer a number of policy suggestions designed to minimize the cost of resolution and protect taxpayers from loss should a large bank or housing enterprise fail.

Benthic Macrofauna of the New York Bight, 1979-89

The benthic macrofauna of the New York Bight has been monitored extensively, primarily to determine trends over space and time in biological effects of waste inputs. In the present study, from 44 to 48 stations were sampled each summer from 1980-1985. Data from other Bight benthic studies are included to· extend the temporal coverage from 1979 to 1989. Numbers of species and amphipods per sample, taken as relatively sensitive indicators of environmental stress, showed consistent spatial patterns. Lowest values were found in the Christiaensen Basin and other inshore areas, and numbers increased toward the outermost shelf and Hudson Shelf Valley stations. There were statistically significant decreases in species and amphipods at most stations from 1980 to 1985. (Preliminary data from a more recent study suggest numbers of species increased again between 1986 and 1989.) Cluster analysis of 1980-85 data indicated several distinct assemblages-sewage sludge dumpsite, sludge accumulation area, inner Shelf Valley, outer Shelf Valley, outer shelf-with little change over time. The "enriched" and "highly altered" assemblages in the Basin appear similar to those reported since sampling began there in 1968. No consistently defaunated areas have been found in any sampling programs over the past 20 years. On a gross level, therefore, recent faunal responses to any environmental changes are not evident, but the more sensitive measures used, i.e. numbers of species and amphipods, do indicate widespread recent effects. Causes of the faunal changes are not obvious; some possibilities, including increasing effects of sewage sludge or other waste inputs, natural factors, and sampling artifacts, are discussed. (PDF file contains 54 pages.

Resolving large financial intermediaries: banks versus housing enterprises

This paper examines the policy issues with respect to resolving the possible failure of housing enterprises Fannie Mae or Freddie Mac. The authors compare and contrast these issues with those raised in the context of large bank failures and also identify important differences in the extant supervisory authorities. Based on these discussions, they offer a number of policy suggestions designed to minimize the cost of resolution and protect taxpayers from loss should a large bank or housing enterprise fail

FGF/heparin differentially regulates Schwann cell and olfactory ensheathing cell interactions with astrocytes: a role in astrocytosis

After injury, the CNS undergoes an astrocyte stress response characterized by reactive astrocytosis/proliferation, boundary formation, and increased glial fibrillary acidic protein (GFAP) and chondroitin sulfate proteoglycan (CSPG) expression. Previously, we showed that in vitro astrocytes exhibit this stress response when in contact with Schwann cells but not olfactory ensheathing cells (OECs). In this study, we confirm this finding in vivo by demonstrating that astrocytes mingle with OECs but not Schwann cells after injection into normal spinal cord. We show that Schwann cell-conditioned media (SCM) induces proliferation in monocultures of astrocytes and increases CSPG expression in a fibroblast growth factor receptor 1 (FGFR1)-independent manner. However, SCM added to OEC/astrocyte cocultures induces reactive astrocytosis and boundary formation, which, although sensitive to FGFR1 inhibition, was not induced by FGF2 alone. Addition of heparin to OEC/astrocyte cultures induces boundary formation, whereas heparinase or chlorate treatment of Schwann cell/astrocyte cultures reduces it, suggesting that heparan sulfate proteoglycans (HSPGs) are modulating this activity. In vivo, FGF2 and FGFR1 immunoreactivity was increased over grafted OECs and Schwann cells compared with the surrounding tissue, and HSPG immunoreactivity is increased over reactive astrocytes bordering the Schwann cell graft. These data suggest that components of the astrocyte stress response, including boundary formation, astrocyte hypertrophy, and GFAP expression, are mediated by an FGF family member, whereas proliferation and CSPG expression are not. Furthermore, after cell transplantation, HSPGs may be important for mediating the stress response in astrocytes via FGF2. Identification of factors secreted by Schwann cells that induce this negative response in astrocytes would further our ability to manipulate the inhibitory environment induced after injury to promote regeneration

Debt maturity, risk, and asymmetric information

We test the implications of Flannery’s (1986) and Diamond’s (1991) models concerning the effects of risk and asymmetric information in determining debt maturity, and we examine the overall importance of informational asymmetries in debt maturity choices. We employ data from more than 6,000 commercial loans from 53 large U.S. banks. Our results for low-risk firms are consistent with the predictions of both theoretical models, but our findings for high-risk firms conflict with the predictions of Diamond’s model and with much of the empirical literature. Our findings also suggest a strong quantitative role for asymmetric information in explaining debt maturity.