The Collapse of Fannie Mae and Freddie Mac: Victims or Villains?

The government takeover of Fannie Mae and Freddie Mac leads to a question over the role of both government sponsored entities in the financial crisis that began in late 2007. Professor Oesterle chronicles the regulatory history of the two organizations, details the conservatorship, notes the subsequent effects of government management, and finally argues that Fannie and Freddie were in the forefront of the crisis. He concludes with a recommendation that Fannie and Freddie be reduced to a role as a broker-dealer, market maker in the mortgage secondary markets.