Bailout of Fannie and Freddie


Summary: As a result of the subprime mortgage crisis, government sponsored entities Fannie Mae and Freddie Mac struggled in the summer of 2008. Many argued that the two companies were simply "too big to fail". On September 7th, 2008, the director of the Federal Housing Finance Agency (FHFA), James B. Lockhart III, announced his decision to place Fannie Mae (Federal National Mortgage Association) and Freddie Mac (Federal Home Loan Mortgage Corporation), into "conservatorship". United States Treasury Secretary Henry Paulson agreed that placing the two GSEs into conservatorship was a good decision, and the only conditions under which he would commit taxpayer money to help them. This "bailout" improved liquidity in the mortgage market, as banks could be assured that Fannie and Freddie had the funds to purchase loans.

Useful Links & Resources:

Unless otherwise stated, the content of this page is licensed under Creative Commons Attribution-ShareAlike 3.0 License