This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

10 Banks With Big Fannie, Freddie Exposure

WASHINGTON (TheStreet) -- It's easy to define which mortgage lenders will be affected by the wind-down and replacement of Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB): All of them.

It's harder to figure out which ones will be affected the most - and nearly impossible to tell whether the effect will be a good one or bad one until Congress decides how it will overhaul the entire housing-finance system.

There are concerns that holders of so-called "agency" mortgage-backed securities (MBS) -- those notes issued by Fannie and Freddie -- could be left holding "orphans" if the securities are replaced by something new. On the other hand, the market for agency MBS is so huge and liquid that there's little chance investors wouldn't be able to buy or sell the securities if they needed to. Additionally, holding that high-quality mortgage debt to maturity, receiving reliable payments, isn't such a bad thing for fixed-income investors.

In any case, it's too early to say what will become of the U.S. housing finance system but change is a sure thing. To get an idea of which banks have the most skin in the Fannie-Freddie game, TheStreet examined exposure to agency MBS, relative to total assets. Those are mortgage bonds - as opposed to whole loans - guaranteed by the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac or the outright government agency Ginnie Mae.

It's not perfect science, but it gives a sense of which banks are loaded up with agency MBS and will have to be most nimble to upcoming changes.

The data come from 83 banks' fourth-quarter filings with the Federal Reserve, via SNL Financial. Not all banks have reported their quarterly information yet, while others don't disclose the necessary level of detail, so the list is not based on a comprehensive examination of the industry.

However, it's worth noting that the banks with the most nominal exposure to agency MBS don't have the most exposure relative to their balance sheets. The banks with the most agency MBS are Bank of America (BAC), Wells Fargo (WFC) and JPMorgan Chase (JPM), with a combined $429.2 billion. But agency MBS comprise just 6% to 10% relative to their massive, diverse balance sheets.

The average of the 83 banks whose data were available is 14.1% - meaning BofA, Wells and JPMorgan have less exposure than most. By contrast, the bank with the most exposure has more than 58% of its balance sheet tied up in agency MBS.

On the following pages are the 10 banks with the most exposure to agency MBS, based on the information currently available:

1 of 11

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,965.74 +53.63 0.32%
S&P 500 1,969.95 -8.96 -0.45%
NASDAQ 4,442.6980 -2.2110 -0.05%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs