Though his controversial critique of the two privately held government-sponsored housing enterprises is at odds with most of the typically glowing Wall Street analyses, the author of FNM/FRE Journal says he stands by his belief that the companies eventually will be see as poor investments.

"We send the reports to our customers hoping they will be persuaded to get out of the stock," said Richard X Bove, an analyst for Baird, Patrick & co., a New York stock brokerage house. "We have no other axes to grind," added Bove (pronounced Bowvay).

Typically the two companies have done what the government has wanted them to do, and federal agencies have shown a great interest in his report, Bove said. When the GSEs realize how depedent their continued existence is on the implied federal subsidy, Bove said, he expects that they will be pressured to acquiesce to government wishes, including even paying the federal government a greater portion of their profits than they do now via federal income taxes.

The Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation declined to comment in detail on the reports. Both had previously issued statements asserting that Bove did not understand their businesses.

Nonetheless, said Bove, the two companies have been "very cooperative" in supplying information for his periodic reports. The second, due out soon, will deal with the question of whether the companies' Treasury borrowings crowd out other borrowers.

Another Wall Street analyst, Eric Hemel of Morgan Stanley, said he agrees with Bove that the growth rate of the companies will decline but he strongly disagrees with Bove's assertion that they tend to borrow short and lend long. "They borrow long and lend long," he said.

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