Competition for Fannie Mae and Freddie Mac?

5 Pages Posted: 22 Oct 2004

See all articles by W. Scott Frame

W. Scott Frame

Federal Reserve Bank of Dallas

Lawrence J. White

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

Abstract

The accounting scandal at Freddie Mac and increased interest rate risk exposure at Fannie Mae generated considerable headlines for the two giant housing GSEs over the past two years. Less widely recognized are two emerging and potentially powerful sources of new competition for Fannie Mae and Freddie Mac: an expanded mortgage finance program by the Federal Home Loan Bank System and new bank risk-based capital standards that are likely to be implemented in 2006. This heightened competition could create incentives for Fannie Mae and Freddie Mac to take greater risks, with potentially unfavorable consequences for U.S. taxpayers. As a result, unless the two firms were to be privatized quickly (which is highly unlikely), enhanced regulatory scrutiny will be in order.

Keywords: Fannie Mae, Freddie Mac, banking, finance, mortgage-backed securities, government sponsored enterprises, GSE, competition, regulation, reform

JEL Classification: G28, G21, G29, M41

Suggested Citation

Frame, W. Scott and White, Lawrence J., Competition for Fannie Mae and Freddie Mac?. Regulation, Vol. 27, No. 3, pp. 56-60, Fall 2004. Available at SSRN: https://ssrn.com/abstract=604081

W. Scott Frame (Contact Author)

Federal Reserve Bank of Dallas ( email )

2200 N Pearl Street
Dallas, TX 75201
United States
214-922-6984 (Phone)

Lawrence J. White

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

Register to save articles to
your library

Register

Paper statistics

Downloads
365
Abstract Views
4,169
rank
81,067
PlumX Metrics