Freddie Mac & Fannie Mae were the catalyst for our current financial crisis. By buying up risky sub-prime mortgages, Freddie & Fannie encouraged banks to make risky loans to folks who otherwise wouldn’t have received mortgages.
Freddie & Fannie did this because they had the backing of the U.S. Treasury. The executives at Freddie/Fannie knew that if they made a bad move and lost billions in the market, the government would bail them out.
This notion was laughed at a few years ago…
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