Freddie, Fannie Live Soft `Core Capital' Fantasy

I'm not sure if the author's right, but it's an interesting claim:

Capital is supposed to measure a company's ability to survive losses and pay off creditors. It's normally a simple calculation: assets minus liabilities, also known as shareholder equity. However, that's not how the government measures capital at Freddie and Fannie.

Instead, its primary capital measure is something called core capital. It's possible a financial institution could be broke -- with liabilities exceeding assets -- and still pass the government's core-capital test.