The wikipedia, a quick and in this case, reliable source explains Fannie Mae and Freddie Mac as follows:
“The Federal National Mortgage Association, colloquially known as Fannie Mae, was established in 1938 by amendments to the National Housing Act after the Great Depression to create a liquid secondary mortgage market and thereby free the loan originators to originate more loans, primarily by buying Federal Housing Administration (FHA) insured mortgages. In 1954, an amendment known as the Federal National Mortgage Association Charter Act made Fannie Mae into “mixed-ownership corporation” meaning that federal government held the preferred stock while private investors held the common stock; in 1968 it converted to a private corporation in order to remove its activity from the annual balance sheet of the federal budget. In the 1968 change, Fannie Mae’s predecessor (also called Fannie Mae) was split into the current Fannie Mae and the Government National Mortgage Association (“Ginnie Mae”). Ginnie Mae, which remained a government organization, supports FHA-insured mortgages as well as Veterans Administration (VA) and Farmers Home Administration (FmHA) insured mortgages, with the full faith and credit of the United States government. In 1970, the federal government authorized Fannie Mae to purchase private mortgages, i.e. those not insured by the FHA, VA, or FmHA, and created the Federal Home Loan Mortgage Corporation(FHLMC), colloquially known as Freddie Mac, to compete with Fannie Mae and thus facilitate a more robust and efficient secondary mortgage market.“
If you watched the video, you’ll realize that there was DANGEROUS corruption and abuse at these two organizations. Our congressional leaders (at the time Democrats) were warned. Yet, they turned a blind eye, bringing about potentially the most catastrophic systemic financial collapse in HUMAN HISTORY!
One can only wonder at the pigheadedness that prevented those in charge from doing ANYTHING which may have averted our current situation. What, aside from politics, was the motivation?
To this day, NONE of these people accept any responsibility for the melt down of our financial system, the collapse of the housing market and the consequent near depression we are all experiencing. They demonize “Wall Street,” corporations and of course, Geroge Bush, but clearly, it was the mismanagement of these 2 federally chartered, quasi-governmental agencies that set the big dominos tumbling.
Keep in mind that these organizations were chartered to make it CHEAPER for americans to own homes. Well, the bailouts now hover around $100 BILLION! That’s no bargain to me. See the story at the following link.
This is just one devastating case among MANY of the incompetence of political individuals taking the reins of an industry in which they have no real experience or expertise. Guided only by their “good intentions,” a belief that profit is evil and everyone is entitled to everything, they royally much up the works. In truth they hurt far more people than they help, and the hurt is catastrophic.