Ethan Bloch: Welcome to WSYK, number 27, what should you know, I am Ethan Bloch in What Should You Know.
Female Speaker: What should you know, you are watching What Should You Know because that's beyond this, what should you know.
Ethan Bloch: So when someone comes up to you and asks if you know about Fannie Mae & Freddie Mac, this is what you should say.
Of course, I know about the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation. Are you serious? You are talking about Fannie Mae and Freddie Mac the two government sponsored agencies that own or guarantee about half of the $12 trillion US mortgage market. So the two beasts work like this. You buy a house and you get a loan, the bank then turns around and sells that loan to either Fannie Mae or Freddie Mac. Fan and Fred then slice and dice these loans into tasty packages and resell them with a fat guarantee.
Due to the credit crisis and the high rate of home loan foreclosures these babies are on the brink of failure and because they own or guarantee almost half of the US mortgage market, if they fail we all fail. In order to prevent economic catastrophe the USA Treasury a.k.a the money mentors are providing up to $200 billion and the US government has stepped in and taken control of Fannie Mae and Freddie Mac for firing the CEOs and effectively wiping out the shareholders. That's what I know about Fannie Mae and Freddie Mac.
This has been another episode of WSYK, What Should You Know, I am Ethan Bloch in What Should You Know.
Female Speaker: What should you know, you are watching What Should You Know because that's beyond this what should you know.
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