Debate: Fannie Mae and Freddie Mac
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Should Fannie Mae and Freddie Mac exist, or be dismantled?
Background and context
In 1938, Fannie Mae and Freddie Mac were created to package and secure mortgage lenders' loans. Congress commissioned these two entities to package loans in a way that guarantees the purchaser the principle and interest back in whole. Congress commissioned the two entities to provide liquidity and stability to the loans. The government sponsored agencies also purchased some of these loans and included them as part of their portfolios. http://books.google.com/books?id=02oFhq78QjsC&pg=PA3&dq=fannie+mae+and+freddie+mac+2011&hl=en&ei=LiU1TuTHDsnZsgaDvqm5Ag&sa=X&oi=book_result&ct=result&resnum=1&sqi=2&ved=0CC4Q6AEwAA#v=onepage&q&f=false
Nine out of ten American mortgage loans are provided by Fannie Mae and Freddie Mac's services. During the 2008 financial crisis, their $5.6 trillion portfolio began to fail. As a result, the government bought them out to soften the banking crisis. The US Treasury recently introduced its plans to do away with the two firms. The government's stated intentions for closing down the entities are to rebalance the ratio of home ownership to home renting. BY 2016-2018, the Treasury plans to enact new regulations that create a smooth transition from a government-based economy to a private sector. http://blogs.abcnews.com/george/2011/02/the-end-of-fannie-mae-and-freddie-mac.html