Even their nicknames, Fannie Mae and Freddie Mac, have a benign ring. Certainly, the hybrids' histories sound auspicious. They solved the problem by bundling these assets together and securitising them on bond markets. The virtues of Fannie and Freddie seemed to be reinforced when they were privatised, Fannie in 1970 and Freddie in the 1980s. The message was clear.
Government can launch an entity and then free it to expand in the private sector.
Fannie and Freddie exploded, acquiring by the late 1990s sufficient assets to dwarf those of individual mortgage lenders. These godparents are some of the financial market's most aggressive financial enterprises. They boast that they perform a social service for the home-owning middle class. They are listed among the other Fs on the New York Stock Exchange. All in all, quite a privatisation success story.