GSEs Riskier Than Broker-Dealers?

The possible need to provide public support to the housing GSEs in the current financial crisis poses a greater risk to the U.S. government's top triple-A ratings than the potential need to support broker-dealers, according to Standard & Poor's. "While the Bear Stearns sale brought into focus the potential risks associated with supporting the broker-dealer segment of the U.S. financial system, the possible need to provide financial support to government-sponsored enterprises poses a far greater fiscal risk to the 'AAA' rating on the U.S. Government," S&P said. The rating agency said the maximum potential cost of supporting broker-dealers in a "deep and prolonged recession" would be below 3% of gross domestic product, while "an equivalent measure for GSEs" would be "up to 10% of GDP." S&P can be found on the Web at http://www.standardandpoors.com.