The 2008 Federal Intervention to Stabilize Fannie Mae and Freddie Mac

13 Pages Posted: 9 Dec 2015

See all articles by W. Scott Frame

W. Scott Frame

Federal Reserve Bank of Dallas

Multiple version iconThere are 3 versions of this paper

Date Written: December 3, 2015

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.

Suggested Citation

Frame, W. Scott, The 2008 Federal Intervention to Stabilize Fannie Mae and Freddie Mac (December 3, 2015). Journal of Applied Finance (Formerly Financial Practice and Education), Vol. 18, No. 2, 2008, Available at SSRN: https://ssrn.com/abstract=2698646

W. Scott Frame (Contact Author)

Federal Reserve Bank of Dallas ( email )

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