On Truly Privatizing Fannie Mae and Freddie Mac: Why It's Important, and How to Do It
Lawrence J. White
New York University (NYU) - Leonard N. Stern School of Business; Leonard N. Stern School of Business - Department of Economics
Wharton Financial Institutions Center Working Paper No. 05-32
The special status, large sizes, and recent rapid growth of Fannie Mae and Freddie Mac have created and/or contributed to a set of difficult policy problems that include: misguided and excessive subsidization of housing in the U.S.; the safety and soundness of the two companies; systemic risk; residential mortgage terms and structure; and the inherent efficiencies of the two companies. The two companies are embedded in a much larger web of policies that broadly and inefficiently encourage housing construction and consumption. The true privatization of the two companies is the best solution to the problems that specifically involve them and would constitute a good start toward correcting the excesses of American housing policy. This true privatization can be accomplished in a relatively clean and straightforward fashion.
Number of Pages in PDF File: 25
Keywords: Fannie Mae, Freddie Mac, government-sponsored enterprises, residential mortgages, securitization, privatization
JEL Classification: G21, G28working papers series
Date posted: October 26, 2005
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