From: Rick Busdiecker <rfb@lehman.com>
Date: Mon, 23 Jan 95 05:39:06 PST
To: Censored Girls Anonymous <carolb@barton.spring.com>
Subject: Re: Why emoney? Why not a web of debt?
In-Reply-To: <Pine.3.89.9501220904.B11359-0100000@barton.spring.com>
Message-ID: <9501231337.AA14968@cfdevx1.lehman.com>
MIME-Version: 1.0
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    Date: Sun, 22 Jan 1995 09:46:26 -0600 (CST)
    From: Censored Girls Anonymous <carolb@barton.spring.com>
    
    Many companies are already founded on "a web of debt".
    "Sallie Mae (Student Loans), Ginnie Mae (General Loans), and Freddie Mac
    (Real Estate Loans)," all come to mind at the moment. They're nicely
    formatted, processed and make even more money for investors as the
    interest rates change.

Student Loans (at least GSLs) and GNMA loans are backed by ``the full
faith and credit'' of the US federal government.  As far as an
investor is concerned, loan default looks the same as if the loanee
paid their debt off early.  The `web of debt' suggestion posted here
doesn't seem to follow the same model unless you count virtually every
form of financial transaction -- including buying a cup of coffe with
a dollar bill -- as fitting the model.

As a side note, GNMA (Ginnie Mae) is not for `general loans', but
rather VA and FHA primary residence mortgages with various
restrictions.  GNMA, FNMA (Fannie Mae), and FHLMC (Freddie Mac) all
exist to provide secondary markets for various kinds of real estate
debt.

--
Rick Busdiecker <rfb@lehman.com>      Please do not send electronic junk mail!
  Lehman Brothers Inc.
  3 World Financial Center  "The more laws and order are made prominent, the
  New York, NY  10285-1100   more thieves and robbers there will be." --Lao Tzu