Customer Quote by Michael Lewis
““For that purpose, partly as the result of Ranieri’s persistent lobbying, two new facilities had sprung up in the federal government alongside Ginnie Mae. They guaranteed the mortgages that did not qualify for the Ginnie Mae stamp. The Federal Home Loan Mortgage Corporation (called Freddie Mac) and the Federal National Mortgage Association (called Fannie Mae) between them, by giving their guarantees, were able to transform most home mortgages into government-backed bonds.””
About This Quote
Source Book: The Big Short by Michael Lewis, 2010
The creation of Freddie Mac and Fannie Mae allowed many mortgages to be packaged into government-backed securities, expanding homeownership financing.
In simple terms: Government-backed securities expanded mortgage financing.
Key Takeaway
Leverage government guarantees to increase housing access.
Themes
finance
government
housing
securitization
Mood
analytical
critical
Type
explanatory
informative
When to use this quote
- homebuyers seeking loans
- banks issuing mortgages
- investors buying bonds
Key Concepts
mortgage markets
risk pooling
public policy
Questions to Reflect On
- How do these guarantees affect market stability?
- What safeguards could reduce associated risks?
A Different Perspective
Reliance on government guarantees can create systemic risk.
![“Crucial decisions are made, today as thousands of years ago, in terms of the intuitive guesses and preferences of a few men in positions of authority...[it is] quite likely that the fate of entire societies may be sealed by a series of avoidable mistakes committed by their leaders.” quote by Michael Lewis](https://sms4smile.com/quotes/img-quotes/a59/michael-lewis-705_decision-making_crucial-decisions-are-made-today-as-thou_16888.jpg)
