All the Devils are Here.docx - All the Devils are Here...

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All the Devils are Here ---- reading notes p1.-p.81 Fannie Mae and Freddie Mac: GSEs government sponsored enterprises. It was the government that securitized modern mortgages. Ranieri and Fink: who are they? Two things that saved Fannie Mae from a collapse: 1)government never stopped supplying funds and employees knew they had a security net to fall back on 2)the arrival of David Maxwell in 1981. What made Fannie and Freddie indispensable in the new mortgage market was one simple fact: the mortgages they guaranteed were the only mortgages investors wanted to buy. Mortgage origination: the act of making a loan to someone who wants to buy a home The 4 Cs of underwriting criteria: credit, capability, collateral and character. National homeownership strategy is to blame, with it’s goal to increase the number of homeowners by 8 million over 6 years. “Creatively putting people who lacked money into homes was precisely what the new subprime companies purported to do.” What is the definition of a subprime lender? Fannie and Freddie did not have to shell out 8% capital of the amounts in their portfolios—the treasury dept. of the bush administration wanted them to be forced to shell out more money because they were able to take on more debt in their investments, enabling them to produce greater profits from the higher risk they had… in simpler terms, what is a credit default swap?

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