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Hoisted from Comments: Bakho on How Fannie and Freddie Should Always Have Been Arms of the Treasury

Bakho:

Varieties and Alternative Definitions of the "Financial Crisis" Revisited...: The Freddie and Fannie Mae that got in trouble were part private-part public. Would an all-private Freddie/Fannie have been more or less likely to get in trouble? Would an all-public Freddie/Fannie have been more or less likely to get in trouble?

Freddie/Fannie responded to the housing bubble once they started losing market share. The pressure on the private F/F was to regain market share.

Would a fully public F/F be under the same pressure to increase market share? No. The pressure would have been for a public institution to not compete with the private sector and only write those loans the private sector was unwilling to write.

Not only was F/F a lesser actor, but the privatization of a public institution created the problems it experienced.

Indeed. It was privatized, but it retained its government guarantee as "too big to fail"...

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