Financial Crisis Inquiry Report by National Commission on the Causes of the Financial; Economic Crisis in the United States

Author:National Commission on the Causes of the Financial; Economic Crisis in the United States
Language: ru
Format: mobi
Publisher: United States Government Printing Office
Published: 2011-05-06T20:00:00+00:00

COMMISSION CONCLUSIONS ON CHAPTER 17

The Commission concludes that the business model of Fannie Mae and Freddie Mac (the GSEs), as private-sector, publicly traded, profit-making companies with implicit government backing and a public mission, was fundamentally flawed. We find that the risky practices of Fannie Mae—the Commission’s case study in this area—particularly from 2005 on, led to its fall: practices undertaken to meet Wall Street’s expectations for growth, to regain market share, and to ensure generous compensation for its employees. Affordable housing goals imposed by the Department of Housing and Urban Development (HUD) did contribute marginally to these practices. The GSEs justified their activities, in part, on the broad and sustained public policy support for homeownership. Risky lending and securitization resulted in significant losses at Fannie Mae, which, combined with its excessive leverage permitted by law, led to the company’s failure.

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