Murin: What Ginnie Mae did Right

Rather than branching out into the newer — and riskier — types of securities, its collateral consists only of government-insured or government-guaranteed loans. Since we don't buy or sell loans or maintain a portfolio, we don't have to engage in sophisticated hedging strategies to manage interest-rate risk. Serving in effect as the banker for the Federal Housing Authority and other government mortgage insurers (Ginnie Mae provides the liquidity that allows them to insure loans at reasonable rates), it benefits from their commitment to basic underwriting principles: You don't loan money to someone without first determining if they can pay it back.