Summary
- The prospect of Fannie Mae and Freddie Mac returning to the private sector would have substantial ripple effects on mortgage rates, bank liquidity and capital ratios.
- During the financial crisis, the US Treasury Department obtained warrants to purchase majority stakes in the Federal National Mortgage Association, or Fannie Mae, and Federal Home Loan Mortgage Corp., or Freddie Mac.
- Privatization stands to drive mortgage rates higher, as it would likely mean at least some weakening of the guarantee status of GSE-backed mortgages.
The prospect of Fannie Mae and Freddie Mac returning to the private sector would have substantial ripple effects on mortgage rates, bank liquidity and capital ratios.
During the financial crisis, the US Treasury Department obtained warrants to purchase majority
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