Fannie
Mae Research
How Frantic May was inspired by Fannie Mae
In our boardgame, Frantic May was inspired by Fannie Mae because of the frantic way in which they packaged mortgages together and sold them to the banking industry. The banks trusted this government backed entity when purchasing mortgage backed security packages. Unfortunately, when the housing market crashed, the MBS's were not backed by the government which led to TARP and subsequent bailouts.
The Federal National Mortgage Association, or more commonly known as Fannie Mae,
have operated since 1968 as government sponsored enterprises (GSE's). What this means is that Fannie Mae is a privately owned company that is operated by shareholders but, at the same time,
is protected financially by the support of the
Federal Government. This the company is unable to completely fail unless the government decides to release its fiscal backing of the company through an act of Congress.
These government protections allow for access to a line of credit by the United States Treasury and the company is exempt from state and local
income taxes as well as SEC oversight.
Fannie Mae was created in 1938 as part of President Franklin Delano Roosevelt's New Deal. During the Great Depression, Fannie Mae was established in order to
buttress local banks with federal money to assure
financing of home mortgages. This was an attempt to raise the amount of families able to have home ownership including making affordable housing more readily available.
Originally, Fannie Mae was more like a national savings and loan, allowing local banks to charge low interest rates on mortgages for the benefit of the home buyer.
This lead to the development of what is now known as the secondary mortgage market.
