Fannie Mae and Freddie Mac: Deconstruction delays

Posted: March 21, 2014 in economy
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UK Only Article: 
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The new world order

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Fannie Mae and Freddie Mac


A flawed reform of America’s housing-finance market



A RARE area of agreement about the financial crisis of 2008 is that Fannie Mae and Freddie Mac were at the core of the meltdown and are in urgent need of reform. On March 16th the leading Republican and Democratic members of the key Senate Banking Committee belatedly released a plan for restructuring the two publicly traded mortgage giants.
The plan has received widespread attention in part because it appears to address the most evident problems of Fannie and Freddie and because it is deemed likely to be approved by Congress. Yet neither of these assumptions, on deeper examination, seems to be true.

To satisfy those who want low-priced mortgages on terms that private markets would never endorse, the plan makes explicit the government guarantee on debt which had been implicit for Fannie and Freddie. This would lower the …

via Economic Crisis


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