Freddie Mac and Fannie Mae – Cute Names for Political Poison

Everyone should remember one simple fact, as they evaluate the housing bubble and its impact on the US and worldwide economies: both Freddie Mac and Fannie Mae are “government sponsored enterprises,” or GSEs. This means that they were created by the federal government for some specific purpose. For Freddie Mac and Fannie Mae, this purpose was to increase the amount of money available for home loans.

Think about that as you consider whether more government intervention into the housing market is required, or less.

For more on what it means to be a GSE, and how that might affect a market, read this article at Capitalism from 2001 (!).

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