White House ponders: Are some hedge funds too big to fail? -  WASHINGTON – When the $9.2 billion Connecticut hedge fund Amaranth Advisors collapsed in 2006, securities attorneys jumped all over each other to express gleefully how the markets absorbed such a mega-fund failure.  In fact, the markets did soak up the implosion fairly well.  However, two and a half years later, policy-makers aren’t so sure the volatile and fragile markets of 2009 could handle another mega-hedge fund collapse. – Boston Herald
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S&P on the Mortgage Insurance Industry – Trouble – rough road ahead, has many points – Bruce Krastig Blog
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Ahead of Stress Test Results, Banks Balk at More Federal Aid – By David Cho and Binyamin Appelbaum – … Federal regulators are racing to assess the health of banks so the government can provide the capital they need. The Obama administration hopes to unveil its appraisal by the first week of May, although sources said the work is in an early phase … Too much disclosure could trigger a run on the weakest banks. But too little could undermine public confidence in the legitimacy of the exercise. …- Washington Post 

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Big Gift – U.S. Program Lends a Hand to Banks, Quietly – By LOUISE STORY – … Banks have been benefiting from an indirect subsidy adopted by the federal government at the height of the financial crisis last fall that allows them to issue their debt cheaply with the backing of the Federal Deposit Insurance Corporation. … “I don’t know how you measure that subsidy,” said Mark Zandi, the chief economist at Moody’s Economy.com. “That’s why they say it’s invaluable. It’s an infinite subsidy. It’s their franchise value.” … – NY Times

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FANNIE MAE AND FREDDIE MAC HELPING MORE HOMEOWNERS; LOAN MODIFICATIONS INCREASING – Fannie Mae and Freddie Mac modified nearly 24,000 loans during the fourth quarter of 2008, an increase of 76 percent over the third quarter. – FHFA.gov