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Struggling mortgage giants Fannie Mae and Freddy Mac have been allowed to issue mortgages of up to $700,000.

This despite the fact that they guarantee $5 trillion in mortgages but only have a paltry $80 billion in capital. Or to put it another way: their total assets are only 1.6 percent of their total liabilities.

Nevertheless, says The Mogambo Guru, Dow Jones Office of Federal Housing Enterprise Oversight director James Lockhart says Fannie and Freddie are both “adequately capitalized, and that Fannie Mae can “ride out the storm” in the housing market over “coming months.”