Fannie Mae and Freddie Mac
While the government isn't obligated to assist Fannie or Freddie in a financial emergency, many on Wall Street believe it would bail them out if there is a collapse. The idea that they are "too big to fail" enables the two companies to borrow relatively cheaply by issuing top-rated securities backed by mortgages.
Fannie and Freddie hold or guarantee around $4.9 trillion in home-loan debt, though under a 1992 law they are required to hold in reserve only a fraction of what is mandated for commercial banks.
Labels: Fannie Mae
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