Fannie Mae and Freddie Mac: A funny form of conservation

Posted: November 20, 2015 in economy
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UK Only Article: 
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How to fight back

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Fannie Mae and Freddie Mac


The government may soon need to rescue America’s mortgage giants again


Washington, DC

TEMPORARY solutions have a way of becoming permanent. The fate of Fannie Mae and Freddie Mac, the two “government-sponsored enterprises” (GSEs) that stand behind much of America’s housing market, is a case in point. The GSEs, which buy American mortgages from banks and other originators, bundle them into securities and resell them to investors with a guarantee, are stuck in a technocratic no-man’s land. Their status has not yet been normalised after their first bail-out, but they may soon require a second. If they do, the administration of Barack Obama, which has been running them since 2009, will be largely responsible.
Fannie and Freddie were tethered to America’s housing market when it fell off a cliff in 2008. The GSEs faced a double impact: they had to cough up to honour their guarantees, …

via Economic Crisis


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