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:
“My objection to Liberalism is this—that it is the introduction into the practical business of life of the highest kind—namely, politics—of philosophical ideas instead of political principles.”
—Benjamin Disraeli (1804–1881)
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—Henry David Thoreau (1817–1862)
“I’m afraid, Mr. Goldwyn, that we shall not ever be able to do business together. You see, you’re an artist, and care only about art, while I’m only a tradesman and care only about money.”
—George Bernard Shaw (1856–1950)