Guaranteed to fail: Fannie Mae, Freddie Mac, and the debacle of mortgage finance

Guaranteed to Fail: Fannie Mae, Freddie Mac, and the Debacle of Mortgage Finance

Volumn , Issue , 2011, Pages

  Acharya, Viral V ^a   Richardson, Matthew ^a   Van Nieuwerburgh, Stijn ^a   White, Lawrence J ^a  

^a NEW YORK UNIVERSITY   (United States)

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EID: 84883996047     PISSN: None     EISSN: None     Source Type: Book    
DOI: None     Document Type: Book

References (30)

1. Ralph Nader, "How Fannie and Freddie Influence the Political Process," chapter 6 of Serving Two Masters, Yet Out of Control: Fannie Mae and Freddie Mac, edited by Peter Wallison (Wash ington, DC: AEI Press, 2001).
2. This description is taken from Bethany McLean, "The Fall of Fannie Mae," Fortune, January 24,2005.
3. Speech at the Conference on Housing, Mortgage Finance, and the Macroeconomy, Federal Reserve Bank of Atlanta, Atlanta, Georgia, dedicated to the theme of government-sponsored enter prises: http://www.federalreserve.gov/boarddocs/speeches/2005/20050519/.
4. Within these mission goals, there were also so-called subgoals that stipulate the fraction of the goal that must be achieved through new home purchases, as opposed to through mortgage refinancing.
5. Housing and Community Development Act of 1992, Title XIII, "Government Sponsored Enterprises," Sec. 1354 "Review of Underwriting Guidelines."
6. These results are generally consistent with those presented by Dwight Jaffee, in April 2010, in testimony before the Financial Crisis Inquiry Commission that the GSEs engaged in large dollar volumes of high-risk lending in each of the years 2003 to 2007. See table 3.3 in Dwight M. Jaffee, "The Role of the GSEs and Housing Policy in the Financial Crisis," Testimony for the Financial Crisis Inquiry Commission, February 27, 2010, Washington, DC.
7. See Treasury Under Secretary Gary Gensler's speech to the House Banking Subcommittee on Capital Markets, Securities and Government Sponsored Enterprises, March 22, 2000, avail able at http://www.ustreas.gov/press/releases/ls479.htm.
8. Source: Lehman Brothers, "Residential Credit Losses-Going into Extra Innings?" April 11,2008.
9. See Viral V. Acharya, Philipp Schnabl, and Gustavo Suarez, "Securitization without Risk Transfer," Working Paper, New York University Stern School of Business, 2009.
10. CBO report, "Assessing the Public Costs and Benefits of Fan nie Mae and Freddie Mac," May 1996, p. 44.
11. Patrick Hosking, Christine Seib, Marcus Leroux, and Grainne Gilmore, "Run on the Bank," Sunday Times, September 15,2007.
12. Henry M. Paulson Jr., On the Brink: Inside the Race to Stop the Collapse of the Global Financial System (New York: Business Plus, 2010), p. 159. http://www.huduser.org/publications/pdf/CMAR_VegasNV.pdf.
13. John P. Hunt, "What Do Subprime Securitization Contracts Actually Say about Loan Modification?" Berkeley Center for Law, Business, and the Economy Working Paper, March 2009.
14. Andrew Haughwout, Ebiere Okah, and Joseph S. Tracy, "Second Chances: Subprime Mortgage Modification and Re- Default," Federal Reserve Bank of New York Working Paper, 2009.
15. See Viral V. Acharya, Philipp Schnabl, and Gustavo Suarez, "Securitization without Risk Transfer," Working Paper, New York University Stern School of Business, 2009.
16. See Adam Ashcraft, Morten Beck, and W Scott Frame, "The Federal Home Loan Bank System: The Lender of Next-to-Last Resort?" Working Paper, Federal Reserve Bank of New York, 2009.
17. Narayana Kocherlakota, "Economic Outlook and Economic Choices," Speech by the President of the Federal Reserve Bank of Minneapolis, May 13,2010.
18. For a more complete description of how the Dodd-Frank Act of 2010 limits the scope of the Federal Reserve's emergency lend ing facilities, see Cooley et al.,"The Power of Central Banks and the Future of the Federal Reserve System" (see note 1).
19. Testimony to the House Financial Services Committee, Febru ary 10,2010.
20. For an explanation of the fluctuations in the share of fixed-rate mortgages in the United States over time, see Ralph Koijen, Otto Van Hemert, and Stijn Van Nieuwerburgh, "Mortgage Timing," Journal of Financial Economics 93 (2,2009): 292-324.
21. Nadezhda Malysheva and John R.Walter, "How Large Has the Federal Financial Safety Net Become?" Federal Reserve Bank of Richmond, Working Paper, March 2010.
22. Edward S. Prescott,. "Can Risk-Based Deposit Insurance Pre miums Control Moral Hazard?" Federal Reserve Bank of Rich mond Economic Quarterly, Spring 2002, pp. 87-100.
23. Note that this feature closely resembles that of covered bonds, which is one of the more popular mortgage finance instruments that are employed internationally, as is described in chapter 7.
24. MBA Response to the Administration's Questions on the Sec ondary Market and GSEs, June 17,2010.
25. Toni Dechario, Patricia Mosser, Joseph Tracy, James Vickery and Joshua Wright, "A Private Lender Cooperative Model for Residential Mortgage Finance," Federal Reserve Bank of New York, Staff Report no. 466, August 2010.
26. John Geanakoplos. "Solving the Present Crisis and Managing the Leverage Cycle," Federal Reserve Bank of New York Economic Policy Review, August 2010, pp. 101-31.
27. HR 4173, Title II, "Orderly Liquidation Authority," Sec. 204, "Orderly Liquidation of Covered Financial Companies."
28. HR4173,Title IX, subtitle D, Sec. 941, "Credit Risk Retention."
29. HR 4173, Title XIV, subtitle B, "Minimum Standards for Mortgages."
30. Gervais, Martin, "Housing Taxation and Capital Accumula- tion," Journal of Monetary Economics 49 (7,2001): 1461-89.