Article: Fussing and fuming over Fannie Mae and Freddie Mac.(Research Notes and News)

Fannie Mae and Freddie Mac are the second- and third-largest U.S. companies and play a central role in housing finance markets. Both companies are considered government-sponsored enterprises (GSEs) because they maintain federal charters that confer a number of rights and responsibilities on them. The largest benefit to Fannie Mae and Freddie Mac of their GSE status is the financial market's perception that the federal government backs their financial obligations even though it explicitly does not.

Authors W. Scott Frame and Lawrence J. White describe the importance of this market perception and then examine five related research and public policy issues. These ...

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