Anatomy of a Crisis
Posted by George Regal Categories: US Economy, Wall Street
In the late 90’s the Clinton Administration put pressure on lenders to offer riskier loans (sub-prime) to the poor, and those with poor credit, to increase home ownership. This was accomplished by lifting restrictions on Fannie Mae and Freddie Mac, allowing them to buy these risky mortgages on, what is called, the secondary market. By expanding the loans that Fannie and Freddie could buy, banks were able to extend more of these loans since they knew they could slough them off on Fannie and Freddie.
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