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Journal Article
Financing housing through government-sponsored enterprises
Three government-sponsored enterprises (GSEs)-Fannie Mae, Freddie Mac, and the Federal Home Loan Bank System-were created to improve the availability of home mortgage financing by supplementing local funding. But today's more evolved financial markets enable retail lenders to tap national markets. Thus, the main contribution of the three housing GSEs has become providing homebuyers an interest rate subsidy that is made possible by the GSEs' special relationship with the federal government. ; This article examines the economic issues arising from the provision of such subsidies via the housing ...
Journal Article
Fannie Mae's and Freddie Mac's voluntary initiatives: Lessons from banking
The federal government has an interest in the financial stability of Fannie Mae and Freddie Mac because of their importance to financial markets and the government's implicit guarantee of their liabilities. ; In October 2000 these two housing government-sponsored enterprises (GSEs) announced six voluntary initiatives. One initiative would enhance market discipline by having the GSEs issue subordinated debt. A second would boost liquidity by having the GSEs maintain a liquid securities portfolio. The other four initiatives would increase transparency by having the GSEs disclose their credit ...
Journal Article
Two key issues concerning the supervision of bank safety and soundness
This commentary focuses on two specific issues. The first asks, What are the market failures that actually create the need for the public regulation of bank safety and soundness? The second issue concerns the safety and soundness issues created by the two mortgage government-sponsored enterprises, Fannie Mae and Freddie Mac, whose very large financial obligations pose a serious systemic risk threat to U.S. financial markets.
Journal Article
Regulating housing GSEs: thoughts on institutional structure and authorities
Many of the benefits that the housing government-sponsored enterprises (GSEs) transmit to homebuyers stem from an implied federal guarantee arising from the GSEs? charter benefits and past supervisory forbearance. But this implicit guarantee also represents a risk to taxpayers if one of these GSEs?Fannie Mae, Freddie Mac, or the Federal Home Loan Bank (FHLB) System?becomes insolvent and the government provides financial assistance. ; In the wake of a $5 billion accounting restatement by Freddie Mac in 2003, concerns about taxpayer liability associated with the housing GSEs have led to various ...
Journal Article
Bank capital exposure to government-sponsored-enterprise debt
Journal Article
Fed economists point to financial system risks from housing GSEs
In a working paper, three Atlanta Fed economists examine the risks that Fannie Mae and Freddie Mac?s portfolios pose to the financial system and propose that limits on their portfolios? size could mitigate their inherent risk.
Working Paper
Comments on Jeske and Kreuger's "Housing and the macroeconomy: the role of implicit guarantees for government sponsored enterprises"
This working paper comments on Karsten Jeske and Dirk Krueger's "Housing and the Macroeconomy: The Role of Implicit Guarantees for Government Sponsored Enterprises," delivered at the Fiscal Policy and Monetary/Fiscal Policy Interactions conference held on April 19-20, 2007.
Working Paper
The 2008 federal intervention to stabilize Fannie Mae and Freddie Mac
Fannie Mae and Freddie Mac are government-sponsored enterprises that play a central role in U.S. 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 ...