Do I Get a Prize?

You get the most awesome prize ever, Arnold! Whenever you run into anybody at the Fed, you get to hold your hands out at them as if you're holding a couple of marionette controllers and say "Dance, puppet, dance!"

If the securities are fully backed by the Federal government, then why is there a risk premium on them?

If this amateur may guess, Phil - perhaps because someone wondering about how exactly the US government will default on its debt might conclude that it might treat different categories of debt differently, with Agency debt being treated more harshly than Treasuries.

Did you buy debt from fanny and freddy yesterday? If so, then you get a prize.

@Phil Birnbaum

If the s%$t really hits the fan the Federal government will renege on the GSE debt commitment. That is why it carries a higher risk.

Now I'm starting to understand the logic behind Milo Minderbinder's syndicate and their egg business in Catch-22. Apparently "the business of America" *is* business.

That's great Ironman! LOL! You can just see some Fed worker walking down Constitution ave, suddenly accosted by Arnold, fingers splayed!