On Truly Privatizing Fannie Mae and Freddie Mac: Why it's Important, and How to Do it

25 Pages Posted: 13 Oct 2008

See all articles by Lawrence J. White

Lawrence J. White

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics

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Date Written: June 2005

Abstract

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.

Keywords: Fannie Mae, Freddie Mac, government-sponsored enterprises, residential mortgages, securitization, privatization

Suggested Citation

White, Lawrence J., On Truly Privatizing Fannie Mae and Freddie Mac: Why it's Important, and How to Do it (June 2005). NYU Working Paper No. EC-05-09. Available at SSRN: https://ssrn.com/abstract=1282533

Lawrence J. White (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business, Department of Economics ( email )

44 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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