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> Fannie Mae and Freddie Mac are creations of regulation as was the dependence of financial institutions on them, which caused said financial institutions to fa

by jeromec 17y ago

> Fannie Mae and Freddie Mac are creations of regulation as was the dependence of financial institutions on them, which caused said financial institutions to fail when Fannie/Freddie went down Huh? Am I missing something? Regulation is a rule (or law). Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs). That would be like saying the Small Business Administration is business regulation. Also, to my knowledge Fannie and Freddie did not fail. I think we would have noticed considering they cover trillions of dollars worth of mortgages.

anamax 17y ago
> Regulation is a rule (or law). Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs). Fannie and Freddie are creations of law in the form of GSEs. Their GSE status made them especially vulnerable to govt interference. They weren't independent of govt in any meaningful sense. > That would be like saying the Small Business Administration is business regulation. It would be if SBA controlled as large a segment of biz lending as Fannie and Freddie did of the mortgage market. Fannie and Freddie define "conforming mortgage". Their lending standards define what mortages are sellable. If they screw it up, as they did, the market takes a huge hit. > Also, to my knowledge Fannie and Freddie did not fail. They got billions of dollars pumped into them and their stock price collapsed. They're not essentially in receivership and are running on govt funds. That's failure. > I think we would have noticed considering they cover trillions of dollars worth of mortgages. What's to notice? The failure of an institution doesn't imply that the debts owed it go away, so folks are still paying their mortgages (or not), regardless of Fannie and Freddie's problems. The take-over is designed to keep mortgages flowing. For a while it wasn't working - if you were looking for a mortgage, you noticed.

by jeromec 17y ago

anamax 17y ago

> Regulation is a rule (or law). Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs). Fannie and Freddie are creations of law in the form of GSEs. Their GSE status made them especially vulnerable to govt interference. They weren't independent of govt in any meaningful sense. > That would be like saying the Small Business Administration is business regulation. It would be if SBA controlled as large a segment of biz lending as Fannie and Freddie did of the mortgage market. Fannie and Freddie define "conforming mortgage". Their lending standards define what mortages are sellable. If they screw it up, as they did, the market takes a huge hit. > Also, to my knowledge Fannie and Freddie did not fail. They got billions of dollars pumped into them and their stock price collapsed. They're not essentially in receivership and are running on govt funds. That's failure. > I think we would have noticed considering they cover trillions of dollars worth of mortgages. What's to notice? The failure of an institution doesn't imply that the debts owed it go away, so folks are still paying their mortgages (or not), regardless of Fannie and Freddie's problems. The take-over is designed to keep mortgages flowing. For a while it wasn't working - if you were looking for a mortgage, you noticed.