User 260928

Fannie and Freddie: Mission Drift on Parade

Because when Fannie was created, the country was recovering from the depression. People couldn't buy homes, because the mortgage market was dead. It brought life back to it.
After the S&L crisis, saving and loans were required to hold higher reserves to curtail loan losses on ordinary mortgages. This provided another incentive to deal with the 2 GSE's. The economy struggled in the wake of the S&L crisis, but these FRE and FNM kept mortage money wheels turning. In the early part of this century, they both helped in lowering the interest rates to the lowest it had been in the 30 years prior, making affordable housing for countless numbers of Americans.

Imagine what would've happened post-depression without FNM or FRE, or after the S&L crisis. I would be willing to say that the Mortgage rates would be out of the roof if it wasn't for these 2 and that some Americans in certain parts of the country would still be homeless. And no government subsidies? Tell that to all the people living in HUD homes and other 'less' fortunate families that have to eat ketchup packets for dinner. The government needs to take care of it's people, but ordinary American's don't see the things that it's government is actually doing (like HUD homes, for example). The best way to do that is through subsidies, giving breaks to the companies and organizations that are helping out these less fortunate Americans.