The Video That Explains Everything You Need To Know About Fannie And Freddie
Steven Mnuchin, President-elect Donald Trump’s nominee for Treasury Secretary, said on Wednesday that privatizing Federal National Mortgage Assctn Fnni Me (OTC: FNMA) and Federal Home Loan Mortgage Corp (OTC: FMCC) was one of his top 10 priorities.
The announcement generated a rally in the stocks, which extended until Thursday’s late morning before most of the gains were given up.
But, while some investors were shocked by the news, others fail to understand how GSEs work and why they are currently sponsored by the government.
Understanding Fannie And Freddie
To better understand the Fannie Mae and Freddie Mac saga, Benzinga points its readers to a Columbia University video featuring renowned journalist Bethany McLean, legendary investor Bill Ackman and Fannie Mae’s former CEO Franklin Raines.
In the video, McLean covers the "conservatorship" of Fannie and Freddie, which, she claims, was "the first real event in the financial crisis."
Ackman supplemented the argument by stating, “I believe there is no alternative for Fannie and Freddie, other than an explicitly government-guaranteed housing financing system, which would add about $6 trillion dollars' worth of debt to the budget.”
Watch the full video to hear the experts further discuss the issue.
Image Credit: By MrHarman (Own work) [CC BY-SA 3.0], via Wikimedia Commons
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