Business
Freddie Mac's primary method of making money is by charging a guarantee fee on loans that it has purchased and securitized into mortgage-backed security bonds. Investors, or purchasers of Freddie Mac MBS, are willing to let Freddie Mac keep this fee in exchange for assuming the credit risk, that is, Freddie Mac's guarantee that the principal and interest on the underlying loan will be paid back regardless of whether the borrower actually repays.
Both Alan Greenspan and Ben Bernanke have spoken publicly in favor of greater regulation of the GSEs, because of the size of their holdings and the widespread perception that they are government backed. Freddie Mac is currently regulated by the HUD and the FHFA. The United States House of Representatives passed HR 1427 (Federal Housing Finance Reform Act of 2007) to consolidate oversight for Freddie, Fannie, and the Federal Home Loan Banks into a single regulator.
Read more about this topic: Freddie Mac
Famous quotes containing the word business:
“The most sensible people to be met with in society are men of business and of the world, who argue from what they see and know, instead of spinning cobweb distinctions of what things ought to be.”
—William Hazlitt (1778–1830)
“There is something in this native land business and you cannot get away from it, in peace time you do not seem to notice it much particularly when you live in foreign parts but when there is a war and you are all alone and completely cut off from knowing about your country well then there it is, your native land is your native land, it certainly is.”
—Gertrude Stein (1874–1946)
“They that go down to the sea in ships, that do business in great waters, these see the works of the Lord and his wonders in the deep.”
—Bible: Hebrew Psalms, 107:23-4.