Those agencies buy up mortgages, bundle them into securities, and then sell those to investors. Defenders of the GSEs say they're important for boosting homeownership generally and sustaining the standard 30-year fixed-rate mortgage specifically. Critics argue they serve mostly to make the financial system riskier and more statist.
One such critic is Mark Calabria, the former head of the Federal Housing Finance Agency that has acted as conservator of the GSEs since 2008. In an interview with Reason's Christian Britschgi, he argues that Fannie and Freddie do little to expand homeownership.
Q: Supporters of Fannie Mae and Freddie Mac argue that they're essential for sustaining the 30-year, fixed-rate mortgage-a product a lot of people like. Do you agree with that?
A: Let's start by reminding ourselves what is special about the 30-year fixed-rate mortgage. Obviously the most special part is, it's fixed for 30 years.
The risky part of that-from the lender's perspective-is interest rate risk. The important point here is Fannie and Freddie don't protect against interest rate risk; they protect against credit risk. What they are guaranteeing you against is that the borrower won't repay.
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Denne historien er fra January 2025-utgaven av Reason magazine.
Start din 7-dagers gratis prøveperiode på Magzter GOLD for å få tilgang til tusenvis av utvalgte premiumhistorier og 9000+ magasiner og aviser.
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THE REAL THREAT IS AN ISOLATED CHINA
DECOUPLING FROM TRADE WILL MAKE THE U.S. POORER AND CHINA MORE TOTALITARIAN.
Against Our Own Best Souls'
SISTER HELEN PREJEAN ON HERLIFE ASA WITNESS ON DEATH ROW
'THE POLITICS HAVE COME TO US'
HOW A CHRISTIAN CHARITY IN EL PASO ENDED UP AT WAR WITH THE TEXAS GOVERNMENT FOR HELPING UNDOCUMENTED IMMIGRANTS
MATERIEL LOSS
HOW THE U.S. MILITARY BUSTS ITS BUDGET ON WASTEFUL, CARELESS, AND UNNECESSARY 'SELF-LICKING ICE CREAM CONES'
'NOT A SUICIDE PACT'
HOW A 1949 SUPREME COURT DISSENT GAVE BIRTH TO A MEME THAT SUBVERTS FREE SPEECH AND CIVIL LIBERTIES
HOW MUSK CAN HELP TRUMP CUT TRILLIONS
DURING PRESIDENT DONALD Trump’s first term in office, the national debt increased by $8 trillion—due, in large part, to huge spending hikes that Congress passed and Trump signed.
THE IMPROBABLE RISE OF MAGA-MUSK
IS ELON MUSK A REACTIONARY WITHA DEFECTIVE BULLSHIT METER OR THE BEST PART OF THE SECOND TRUMP ADMINISTRATION?
A Free-Range Family
RIGHT NOW, CHILDHOOD is intensely meh. Maybe you read the recent report in The Journal of Pediatrics that said that as kids' independence and free play have gone down, their anxiety and depression have been going up.
Educulture Wars
THE CULTURE WAR is costing school districts billions, according to a report released in October 2024 by the UCLA Institute for Democracy, Education, and Access. The report surveyed superintendents at 467 school districts nationwide about extra expenditures they undertook because of increased conflict over culture war issues such as critical race theory, book chal- lenges, gender-related debates, and other politicized topics. The report estimates that such fights cost school districts around $3.2 billion during the 2023-2024 school year.
Q&A Penny Lane
PENNY LANE'S NEW Netflix documentary, Confessions of a Good Samaritan, delves into her life-changing decision to donate a kidney to a stranger. Known for her thoughtful and provocative storytelling, Lane has explored human connection and empathy in films such as Hail Satan? and The Pain of Others. Last October she spoke with Reason's Nick Gillespie and shared her emotional, physical, and philosophical experience with anonymous kidney donation and the challenges that came with it.
