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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/26985
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| Title: | Emerging Competition and Risk-Taking Incentives at Fannie Mae and
Freddie Mac |
| Authors: | White, Lawrence J.
Frame, W. Scott |
| Keywords: | Government-sponsored enterprises
mortgages
securitization
risk-based capital
moral hazard
charter value |
| Issue Date: | 2004 |
| Series/Report no.: | S-FI-04-01 |
| Abstract: | This paper examines two major forces that may soon increase competition
in the U.S. secondary conforming mortgage market: 1) the expansion of
Federal Home Loan Bank mortgage purchase programs, and 2) the adoption
of revised risk-based capital requirements for large U.S. banks (Basel
II). We argue that this competition is likely to reduce the growth and
relative importance of Fannie Mae and Freddie Mac and hence their
franchise values and effective capital. Such developments could, in
turn, lead to more risky behaviors by these two GSEs. It is this last
consequence that warrants greater regulatory awareness. |
| URI: | http://hdl.handle.net/2451/26985 |
| Appears in Collections: | Financial Institutions
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