Felix Salmon writes:
Fannie Mae Datapoint of the Day - Finance Blog - Felix Salmon - Market Movers - Portfolio.com: Fannie Mae's credit default swaps are trading over 200bp, despite their implicit government guarantee. Writing protection at these levels seems like a no-brainer to me: even if there is an event of default, recovery is going to be very close to par, and you get all the insurance premiums in the mean time.
Unless, of course, the default happens very quickly--and you don't get many insurance premiums first. And that isn't going to happen--unless it is, and unless somebody knows something and wants to be your counterparty.
Me? I think it is time to make FNMA's government guarantee explicit, and use it to start buying up mortgages...