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The GSE Public-Private Hybrid Model Flunks Again: This Time It’s the Federal Home Loan Bank System (Part 1)

The Stoop (NYU Furman Center)

11 This core flaw of GSE design was described by then-Secretary of the Treasury Henry Paulson when F&F were placed into conservatorship in 2008. ” The Pre-2008 Fannie Mae and Freddie Mac F&F were relatively small prior to the Savings & Loan (S&L) Crisis of 1989, having only a single-digit market share of funding U.S.

2008 88
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Government Mortgage Interest Rates: A Serious Discussion about the Intertwined Topics of Risk Adjustment and Cross-subsidies

The Stoop (NYU Furman Center)

Over the near century of evolution of this dominant government role, the business model used by all four agencies has come to rely on packaging those loans into mortgage-backed securities (MBS) and then guaranteeing the investors in the MBS against credit losses on the underlying mortgage loans. 3 This business model is very complex.