What would the Fed do during a crisis with Fannie Mae or any GSE?
“Under Section 13(3) of the Federal Reserve Act, Federal Reserve Banks have the authority to discount paper for individuals, partnerships or corporations. Direct lending to the GSEs would have to come under provisions of this part of the Federal Reserve Act. Critical provisions include a finding of unusual and exigent circumstances and an affirmative vote of not less than five members of the Board of Governors. The loans would have to be fully collateralized.
