The 2008 Federal Intervention to Stabilize Fannie Mae and Freddie Mac

Journal of Applied Finance, Fall/Winter2008, Vol. 18, Issue 2, pp. 124-136

Posted: 26 Jul 2012  

W. Scott Frame

Federal Reserve Bank of Atlanta

Multiple version iconThere are 3 versions of this paper

Date Written: 2008

Abstract

Fannie Mae and Freddie Mac are government-sponsored enterprises that play a central role in US residential mortgage markets. In recent years, policymakers became increasingly concerned about the size and risk-taking incentives of these two institutions. In September 2008, the federal government intervened to stabilize Fannie Mae and Freddie Mac in an effort to ensure the reliability of residential mortgage finance in the wake of the subprime mortgage crisis. This paper describes the sources of financial distress at Fannie Mae and Freddie Mac, outlines the measures taken by the federal government, and presents some evidence about the effectiveness of these actions. Looking ahead, policymakers will need to consider the future of Fannie Mae and Freddie Mac, as well as the appropriate scope of public-sector activities in primary and secondary mortgage markets.

Keywords: Secondary Mortgage Market, Mortgages Intervention, Federal Government

Suggested Citation

Frame, W. Scott, The 2008 Federal Intervention to Stabilize Fannie Mae and Freddie Mac (2008). Journal of Applied Finance, Fall/Winter2008, Vol. 18, Issue 2, pp. 124-136. Available at SSRN: https://ssrn.com/abstract=1652852

W. Scott Frame (Contact Author)

Federal Reserve Bank of Atlanta ( email )

1000 Peachtree Street, NE
Atlanta, GA 30309-4470
United States
404 498 8783 (Phone)
404 498 8810 (Fax)

Paper statistics

Abstract Views
155