Serving Two Masters, Yet Out of Control: Fannie Mae and by Peter Wallison

By Peter Wallison

Simply because disparate, virtually diametrically contrary consumers call for loyalty from Fannie Mae and Freddie Mac, those government-sponsored entities needs to satisfy eventually irreconcilable roles. As publicly owned firms, they have to maximize profitability for his or her shareholders; but, as quasi-government organisations, they need to use their large, implicit govt subsidies in help in their public missions. in fact, they cut up the variation as they move a wide part of their subsidy to their shareholders. even as, Congress doesn't regularly scrutinize Fannie and Freddie, regardless of their huge, immense measurement and value. the 2 are basically too huge and strong for the small organisation charged through Congress as their watchdog. therefore, whereas trying to serve masters, Fannie and Freddie are actually uncontrolled. could privatization clear up the trouble of the twin private and non-private shape? If no longer, what different concepts exist? In 11 essays, public figures, economists, and executive officers probe the popular positions that experience allowed the 2 corporations to develop to unparalleled measurement, become aware of amazing profitability, and accomplish exceptional impression over the political strategy.

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Extra resources for Serving Two Masters, Yet Out of Control: Fannie Mae and Freddie Mac

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This chapter uses the term conforming 34 VALUE OF FEDERAL SUBSIDIES mortgage to refer to any single-family loan with a balance less than the limit. The Departments of Veterans Affairs and of Housing and Urban Development (HUD) and the Independent Agencies Appropriation Act for Fiscal Year 1999 repealed the limit on the size of multifamily mortgages eligible to be financed by Fannie Mae and Freddie Mac. 4. See Freddie Mac 1996, 32, and the statements by Robert B. Zoellick of Fannie Mae and Leland B.

The estimates for 1989 and prior years are from Hendershott 1992. The author estimated the GSEs’ share for more recent years based on publicly available data and the percentages in table 1 on page 100, Cotterman and Pearce 1996. 14. The studies’ econometric models use both the contract and the effective mortgage rate as the dependent variable. The effective rate builds in discount points paid over a ten-year horizon. 15. The HSH data, which were purchased by the Congressional Budget Office and are copyrighted by HSH, include mortgage rates and points.

Contract HE09602C. Ugoletti, Mario. 1997. ” Paper pre- ROBERT S. SEILER JR. 39 sented at the twentieth annual research conference of the Association for Public Policy Analysis and Management. S. Congress, House of Representatives, Committee on Banking and Financial Services. 1996. Oversight of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (Hearing before the Subcommittee on Capital Markets, Securities, and Government-Sponsored Enterprises), 104th Congress, 2d session, April 17, June 12, July 24, 31, August 1.

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