The Economist reports about the political economy aspects of America’s semi-nationalized mortgage industry.
Several articles in the Journal of Economic Perspectives review the bailouts of General Motors, Chrysler, AIG, Fannie Mae and Freddy Mac as well as TARP during the 2007–2009 period. The US taxpayer was lucky; but not all objectives have been met.
The Economist reports about plans to have Fannie Mae and Freddie Mac accept mortgages for intermediation and insurance even if these mortgages only satisfy weaker lending standards than those currently required by the two government sponsored entities. (Fannie Mae and Freddie Mac buy eligible mortgages, repackage and guarantee them and sell them on to investors.) The plans to accept laxer lending standards appear to be motivated by the aim to improve the affordability of home ownership for risky borrowers. The same aim is widely credited to have contributed towards sowing the seeds of the recent financial crisis.