Stress testing has recently become a critical risk management and capital planning tool for large financial institutions and their supervisors around the world. However, the one prior U.S. experience tying stress test results to capital requirements was a spectacular failure: the Office of...

Fannie Mae and Freddie Mac are government-sponsored enterprises that play a central role in U.S. residential mortgage markets. In recent years, policymakers became increasingly concerned about the size and risk-taking incentives of these two institutions. In September 2008, the federal...

This working paper comments on Karsten Jeske and Dirk Krueger's "Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises," delivered at the Fiscal Policy and Monetary/Fiscal Policy Interactions conference held on April 19–20, 2007.