Photo: z_everson, Creative Commons, Flickr
"Housing finance in the U.S. has long depended on the GSEs Fannie Mae and Freddie Mac," writes Stephanie H. Giroux, TD Ameritrade's Chief Investment Strategist. "These mortgage lending giants were created by Congress in 1938 and 1970 to support the housing market, and currently hold $5.4 trillion of the roughly $12 trillion U.S. mortgage market. Over the past four quarters, Fannie and Freddie have posted losses totaling roughly $14 billion, as mortgage foreclosure rates continue to climb in the U.S.
The government’s intervention will result in the largest federal bailout in U.S. history, which is intended “to meet the objectives of market stability, mortgage availability and taxpayer protection," said Treasury Secretary Henry Paulson."
