Sunday, 13 March 2011

loans: Serving Two Masters, Yet Out of Control: Fannie Mae and Freddie Mac

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

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Because two disparate, almost diametrically opposite clients demand loyalty from Fannie Mae and Freddie Mac, these government-sponsored entities must fulfill two ultimately irreconcilable roles. As publicly-owned corporations, they must maximize profitability for their shareholders; yet, as quasi-government agencies, they should use their huge, implicit government subsidies in support of their public missions. In reality, they split the difference as they transfer a large portion of their subsidy to their shareholders. At the same time, Congress does not routinely scrutinize Fannie and Freddie, despite

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