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:
“Emotions have no place in business, unless you do business with them.”
—Friedrich Dürrenmatt (1921–1990)
“Every expansion of government in business means that government in order to protect itself from the political consequences of its errors and wrongs is driven irresistibly without peace to greater and greater control of the nation’s press and platform. Free speech does not live many hours after free industry and free commerce die.”
—Herbert Hoover (1874–1964)
“Every American travelling in England gets his own individual sport out of the toy passenger and freight trains and the tiny locomotives, with their faint, indignant, tiny whistle. Especially in western England one wonders how the business of a nation can possibly be carried on by means so insufficient.”
—Willa Cather (1876–1947)