"We believe that the testimony does not appreciate the role of our mortgage portfolio and the impact of his proposal."

If the value of Mutual Benefit's $5 billion mortgage portfolio fell another 10 percent, the company would be insolvent.

The total mortgage portfolio is $5.5 billion, including $300 million for farm loans.

For example, Western Federal's mortgage portfolio is valued at 33 percent of its original book value.

To hedge against this loss, the managers of big mortgage portfolios buy Treasury securities or similar instruments.

Additional flexibility was also provided in meeting the requirement that the companies reduce their retained mortgage portfolios over time.

The people running big mortgage portfolios would tell you that hedging allows them to manage away their risks.

And Mellon has also recently acquired more than $8 billion in mortgage portfolios and a finance company.

That reflected the deteriorating condition of their mortgage portfolios over all.

Indeed the government has some liability for more than half the nation's mortgage portfolio.