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Ok - I misspoke: the mortgages they own or guarantee.

• anamax 18y ago
  Note that the default rate of the loans that Fannie and Freddie bought doesn't tell us that they did good biz. It also doesn't tell us that they didn't hire political hacks. Fannie and Freddie are both sucking in govt bailouts and all of their assets are toxic. They pretty much created the subprime mortage market by "guaranteeing" to buy. Fannie and Freddie stock made sense (when it made sense) only because govt gave tax preferences to certain types of buyers. That hid the lack of real profitability (while the hired political hacks were taking out tens of millions) and took down banks. (The govt gave special treatment to fannie and freddie stock that banks held, which pretty much guaranteed that they'd tank when Fannie and Freddie went under.) Do you really want to argue that Fannie and Freddie weren't near the bottom in terms of bad biz practices? Note that I'm not claiming that they're the worst. Competitors include Citicorp's Robert Reich, who Clinton said was the smartest Treasury Secretary evar. He's on the list because he's the one who popularized CDOs. As far as Fannie and Freddie's propensity to hire political hacks, Google is your friend. No, I'm not saying that govt biz are alone at that, but ....
  • MaysonL 18y ago
    A) Freddie and Fannie did better than the rest of the industry. B) Fannie and Freddie have over 5 trillion dollars in their portfolios, owned and guaranteed. The mortgages from before 2006 are pretty sound, from 2006 are not so good, from 2007 really bad - but nowhere near as bad as those from the rest of the industry. C) Fannie and Freddie should never have been "private" in the first place: trying for year after year growth to keep their stock growing led them to make a lot of mistakes, often aided and abetted by their political friends.