Fannie Mae

{{Economics}}'''Fannie Mae''' (the '''Federal National Mortgage Association''', or '''FNMA''') is a [[New Deal|"government-sponsored enterprise"]]<ref group=note>Like the [[Federal Reserve]], it contains both private and public elements.</ref> (GSE) created in [[Great Depression|1938]] and today has become the largest underwriter of home mortgages in the [[United States]].

==Operation==
It does not lend money directly to consumers, instead purchasing bundles of loans that banks make on what is called the secondary market. Fannie Mae issues guidelines to mortgage lenders on the documentation required from borrowers to conform to what Fannie Mae agrees to buy.<ref>[http://www.fanniemae.com/portal/about-us/company-overview/about-fm.html Who is Fannie Mae Today?], fanniemae.com</ref> Qualifying guidelines primarily focus on income, credit reports, and loan to value. By Fannie Mae guaranteeing purchase of bundles of mortgages from banks, lenders' funds are quickly replenished and they are able to originate more loans.

==Scandals and crises==
In 2006 Fannie Mae was wracked by an accounting scandal. Regulators found a culture of corruption where management overstated earnings by $11 billion during the late 1990s and reaped huge bonuses for themselves.<ref>[http://articles.chicagotribune.com/2006-05-24/business/0605240197_1_senior-management-manipulated-accounting-fannie-mae-executive-officer-franklin-raines 'Arrogant and unethical': Fannie Mae to pay $400 million penalty], ''Chicago Tribune''</ref>

Following the [[Banking crisis#Great Recession|Great Recession]], Fannie Mae currently guarantees against default about $5 trillion in mortgages of American homeowners -- nearly half of all mortgages in the [[United States]]. It, alongside sister GSE '''Freddie Mac''' ('''Federal Home Loan Mortgage Corporation''', or '''FHLMC'''), was 
nationalized
 placed under conservatorship by the Federal Housing Finance Agency (FHFA) in [[Great Recession|September 2008]].<ref>[http://money.cnn.com/2008/09/07/news/companies/fannie_freddie/ U.S. seizes Fannie and Freddie], CNN</ref>

==Conspiracy==
Fannie & Freddie became part of the [[Scapegoat|usual suspects]] for [[Wingnut|some people]] who decided that ~$ big government $~ was ''solely'' responsible for the 2008 financial collapse. Exactly how is [[Bullshit|complicated]], but suffice to say it involves a [[Revisionism|mutated timeline]] and a dash of truth amongst the BS. Technically, the government did [[Deregulation|ease regulations]] on the financial sector, much of which was based on oversight, but that only allowed financial institutions offering mortgages to be far more reckless in their practice offering more and more NINJA (No Income, No Job/Assets) loans.<ref>[http://web.archive.org/web/20080303225935/http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/03/ccsubprime103.xml NINJAs sadly having nothing to do with mutant turtles.]</ref>
==Notes==
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==References==
{{reflist}}
[[Category:United States government]]
[[Category:Business]]
[[Category:Financial crisis of 2007 to 2009]]
[[Category:Government incompetence]]
[[Category:Economics]]

Categories: United States government, Business, Financial crisis of 2007 to 2009, Government incompetence, Economics