A Quote by Gary H. Stern
RE: GSEs like Freddie Mac & Fannie Mae: "creditors will continue to underprice the risk-taking of these financial institutions, overfund them, and fail to provide effective market discipline Facing prices that are too low, systemically important firms will take on too much risk."
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Fannie Mae and Freddie Mac - two bloated and corrupt government-sponsored programs - contributed heavily to the crisis.In order to prevent another crisis, we need to do what we should have done years ago - reform Fannie Mae and Freddie Mac. We also need to repeal Dodd-Frank, the Democrats' failed solution. Under Dodd-Frank, 10 banks too big to fail have become five banks too big to fail. Thousands of community banks have gone out of business.
These two entities—Fannie Mae and Freddie Mac—are not facing any kind of financial crisis.
Although not well known outside Wall Street, Freddie Mac and its corporate cousin, Fannie Mae, are two of the world's largest financial institutions and play a crucial role in the housing market.
These two entities Fannie Mae and Freddie Mac are not facing any kind of financial crisis. The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.
Fannie Mae and Freddie Mac buy mortgages from banks and other lenders, providing those financial institutions with capital to make new loans.
There is plenty of blame to go around for the U.S. housing bubble, but not much of it belongs to Fannie Mae and Freddie Mac. The two giant housing-finance institutions made many mistakes over the decades, some of them real whoppers, but causing house prices to soar and then crater during the past decade weren't among them.
Well, Mark, I led the charge for five or six years to get reforms for Fannie Mae and Freddie Mac. I was chairman of an organization called 'FM Policy Focus.' What we were saying was, if there was blip in the housing market, Fannie and Freddie would destabilize the greatest economy in the world.
Limiting the destructive risk-taking by large financial firms and banks which are 'too big to fail' is needed.
If your appraisal comes back too low - you don't have at least 10% equity for a conforming loan or 20% for a jumbo loan - you might not be able to refinance at all, at least with a loan that's packaged and sold to Fannie Mae and Freddie Mac. That means you may have to pay a much higher rate.
When you start to confuse Freddie Mac, Sallie Mae and Fannie Mae with members of your family, and you remember 2,000 stock symbols but forget the children's birthdays, there's a good chance you've become too wrapped up in your work.
For market discipline to constrain risk effectively, financial institutions must be allowed to fail. Under optimal financial regulatory and financial system infrastructures, such a failure would not threaten the overall system.
These public-private partnerships are very, very dangerous. The most rotten part of the financial system in the US consisted of the government sponsored entities, Fannie Mae and Freddie Mac. They really kicked off this crisis. The state should set the rules and enforce them - but not become involved as a market player.
Congress created Fannie Mae in 1938 and Freddie Mac in 1970. For many years, these institutions prudently pursued their core mission of enhancing the availability of credit for housing.
In some industries, we refer to risk taking as 'research and development.' At financial institutions, we often take risk by investing in securities.
We do not have a crisis at Freddie Mac, and particularly Fannie Mae, under the outstanding leadership of Frank Raines.
What the banking system needs is creditors who monitor risk and cut their exposure when that risk is too high. Unlike regulators, creditors and counterparties know the details of a deal and have their own money on the line.
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