We have long been concerned with the GSEs ability to act in the public interest. Taking prudent risks in lending so that others may attain an objective is the essential role of a financial intermediary." Much to their credit, they succeeded in accomplishing this goal many years ago."Ĭhairman Greenspan also stated that: "The history of financial involvement in increasing home ownership is one of taking risks - of designing new financial instruments and financial products to make financial resources available so that more people can realize the goal of home ownership.
Fannie Mae and Freddie Mac were created by Congress to "provide funding to mortgage lenders by purchasing their mortgages and then holding them or selling them to investors in the form of securities that they guarantee." These companies are also known as Government Sponsored Enterprises, or GSEs.įormer Federal Reserve Board Chairman Alan Greenspan noted, in a letter to the Chairman of the House Financial Services Subcommittee on Capital Markets, Securities, and Government Sponsored Enterprises dated May 19, 2000, "(The GSEs) were each chartered with the purpose of smoothing out regional imbalances in mortgage supply and integrating regional mortgage markets into the national capital markets.
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