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 business is to teach my aspirations to confirm themselves to fact, not to try and make facts harmonize with my aspirations.”
—Thomas Henry Huxley (1825–95)
“BOSWELL. But what do you think of supporting a cause which you know to be bad? JOHNSON. “Sir, you do not know it to be good or bad till the Judge determines it.... It is his business to judge; and you are not to be confident in your own opinion that the cause is bad, but to say all you can for your client, and then hear the Judge’s opinion.”
—Samuel Johnson (1709–1784)
“Knighterrantry is a most chuckleheaded trade, and it is tedious hard work, too, but I begin to see that there is money in it, after all, if you have luck. Not that I would ever engage in it, as a business, for I wouldn’t. No sound and legitimate business can be established on a basis of speculation. A successful whirl in the knighterrantry line—now what is it when you blow away the nonsense and come down to the cold facts? It’s just a corner in pork, that’s all.”
—Mark Twain [Samuel Langhorne Clemens] (1835–1910)