And because I respect Yves Smith a lot, I have to note that she takes issue with the Pro Publica report about Freddie Mac betting against homeowners:

A new ProPublica story, “Freddie Mac Betting Against Struggling Homeowners,” treats the fact that Freddie Mac retains the riskiest tranche of its mortgage bond offering, known as inverse floaters, as heinous and evidence of scheming against suffering borrowers.

The storyline in this piece is neat, plausible, and utterly wrong. And my e-mail traffic indicates that people who are reasonably finance savvy but don’t know the mortgage bond space have bought the uninformed and conspiratorial ProPublica thesis hook, line, and sinker.

Basically, she says that what we are looking at are normal hedges against interest rate fluctuations, and this was one part of this strategy, and, “Looking at one position in isolation is meaningless.”

Additionally, she implies that this might be a hit job from the Obama administration, because FHFA head Edward DeMarco, who supervises the GSEs in receivership, is not moving aggressively to refinance troubled mortgages, and he’s signed off on some of the big paydays for officials at Fannie Mae and Freddie Mac.

Additionally, FHFA has become increasingly aggressive about forcing banks to take back fraudulent mortgages (Put-backs), which opens a multi-billion dollar can of whup ass on the big Wall Street banks, which almost certainly puts DeMarco on Timothy “Eddie Haskell” Geithner’s naughty list, and leaking this to the press is very much the Treasury Secretary’s style.

Truth be told, I don’t know who is right, though if I were betting, I would take wrong and evil for both DeMarco and Geithner, but I’m a cynic.