Source: Reason
by Veronique de Rugy
“The movie The Big Short — dramatizing the reckless behavior in the banking and mortgage industries that contributed to the 2008 financial crisis — captures much of Wall Street’s misconduct but overlooks a central player in the collapse: the federal government, specifically through Fannie Mae and Freddie Mac. These two government-created and government-sponsored enterprises (GSEs) encouraged lenders to issue risky home loans by effectively making taxpayers cosign the mortgages. … After the bubble inevitably burst, Fannie and Freddie were placed under conservatorship by the Federal Housing Finance Agency. The conservatorship imposed rules aimed at preventing future taxpayer-funded bailouts and protecting the economy from government-fueled market distortions. Now President Donald Trump’s appointee to lead that agency, Bill Pulte, is considering ending this conservatorship without addressing the core structural flaw that fueled the problem in the first place: implicit government guarantees backing all Fannie and Freddie mortgages.” (05/29/25)
https://reason.com/2025/05/29/are-we-headed-for-another-disaster-with-fannie-and-freddie/