July 7, 2007
Fannie Mae: Another New Deal Monstrosity
The shortcomings of Fannie Mae have been overlooked on the basis that Fannie plays a critical role in driving the housing sector, and thus the American economy. As Fannie goes, so goes the nation. Fannie means housing, and accordingly, Fannie is the conduit that takes one from "inequitable ownership" to the American Dream. In a nation where equality is everything, and where advantage need not be earned, but only redistributed, how can anything be more virtuous?
Fannie Mae (FNMA or Federal National Mortgage Association), a government-sponsored enterprise (GSE), finances one of every five home loans in the United States. In 1938 this GSE was founded by the federal government with a mission to increase home ownership across the United States. It is subject to congressional oversight via the Office of Federal Housing Enterprise Oversight (OFHEO). Fannie Mae stock (FNM) is actively traded on the New York Stock Exchange and is part of the Standard & Poor’s 500 Composite Stock Price Index.
Fannie Mae may be one of the most ill-fated welfare creations, ever, on the part of the United States government. In the beginning, Fannie Mae’s impact was negligible, however, from the outset there were plans to swell Fannie’s waistline by expanding her purchasing authority. At about the time the American soldiers were coming home from WWII, Fannie was enabled to purchase loans guaranteed by the Veterans Administration, in addition to the Federal Housing Administration-insured mortgages it was already purchasing. This creation and expansion of a secondary market for mortgages was a vital boost to the supply of lendable money in the United States.
