Select Page

This Note will discuss the uncontrollable growth of the mortgage giants, Fannie Mae and Freddie Mac, and the need to change the policies that created perverse incentives for financial institutions and investors to act in ways adverse to economic stability.  The first part of this Note will discuss the history of the federal government’s role in financing mortgages and promoting home ownership.  Secondly, the Note will examine the secondary mortgage market and the innovative financial securities that have emerged in the past few years and the concerns that come with these new products.  Finally, part three of the Note will present arguments for privatizing Fannie Mae and Freddie Mac. . .