Fannie Mae and Freddie Mac: Structurally unsound

UK Only Article: 
standard article

Issue: 

The world’s biggest economic problem

Fly Title: 

Fannie Mae and Freddie Mac

Rubric: 

America restores the weak lending standards that led to the housing crash

Location: 

New York

WHEN politicians bashed Wall Street for its reckless mortgage lending in the wake of the subprime crisis, bankers retorted that it was the politicians’ enthusiasm for expanding home ownership, even if it meant small deposits and low credit standards, that had really fomented the disaster. Yet that enthusiasm is undimmed: in a speech on October 20th Mel Watt, head of the Federal Housing Finance Authority (FHFA), announced plans to reintroduce mortgages with deposits as low as 3% through Fannie Mae and Freddie Mac, the two government-backed housing giants it regulates.
Both Fannie and Freddie were bailed out during the financial crisis. There was much talk in Congress of winding them down; in the meantime, they tightened loan requirements to limit the risk to taxpayers. But that changed …

Link to article: www.economist.com/news/finance-and-economics/21627699-america-restores-weak-lending-standards-led-housing?fsrc=rss

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