Federal Reserve Board economists have released a long-anticipated study that says the giant mortgage portfolios retained by Fannie Mae and Freddie Mac "clearly benefit" shareholders but have a "statistically negligible" effect on the mortgage rates homebuyers pay.The study attempts to deflate the claims by the two government-sponsored enterprises that their $1.57 trillion investment in mortgage loans and mortgage-backed securities helps to stabilize the mortgage market and lower mortgage rates. "A sudden increase in GSE portfolio purchases or MBS issuance has essentially no long- or short-term effects on mortgage spreads," the Fed study says. The GSEs like to boast that their ability to step up their MBS purchases during the 1998 financial crisis stabilized the prime market, while a flight to safety by investors crippled the subprime market. But the Fed researchers contend that the GSEs did not play a "significant role in managing mortgage risks" during the 1998 crisis. "We fundamentally disagree" with the study, a Freddie Mac spokeswoman said.

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