Document Type

Case Study

Case Series

The Rescue of Fannie Mae and Freddie Mac

JEL Codes

G01, G28


Two government-sponsored enterprises (GSEs), the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac), dominated the secondary mortgage market during the US housing crisis, collectively holding or guaranteeing $5.3 trillion in mortgage assets by late 2007. As the crisis escalated, the two GSEs began to report substantial losses and their survival became uncertain. On September 6, 2008, the GSEs’ new regulator, the Federal Housing Finance Agency (FHFA), placed the firms into indefinite conservatorships, one step of a four-part government intervention to stabilize the enterprises. This case study evaluates the purpose and efficacy of the conservatorships and finds that they accomplished their emergency goals of stabilizing the GSEs and allowing them to maintain the secondary mortgage market. However, the FHFA Office of Inspector General concluded that the agency could better accomplish its oversight mission by proactively exerting greater control over its conservator approval process. As of this case study’s publication, the conservatorship for both companies is ongoing.

Date Revised