Fannie Mae
Fannie Mae is a leading mortgage company and one of the most financially successful businesses within its industry. Given the salient features of the organization that has culminated into its current standing, this report offers a brief but concise overview of the corporation.
The organization began as a part of Roosevelt’s New Deal, a program initiated by the onslaught of worldwide economic depression in the 1930s and the complete collapse of the housing market. Chartered by Congress as the Federal National Mortgage Association in 1938, the organization’s principal mission was to encourage home ownership by providing local banks with money and ensuring the residential mortgage market is well funded by the creation of a secondary mortgage market (Cottle 1998, Allie Mae 2004).
In 1968 Lyndon B. Johnson transformed Fannie Mae into a “government sponsored enterprise” (GSE) due to the company’s complete monopolization of the second mortgage market (Cottle 1998). Cottle explains that, “as a GSE, the company is subject to congressional oversight and certain limitations on its activities, but it nonetheless is a privately operated, publicly traded, for-profit corporation charged with making money for its shareholders” (p. 18). The U.S. president gets to appoint several board members, and the U.S. Treasury Department approves Fannie Mae's debt issuance. And it has approved and approved and approved. Fannie Mae and Freddie Mac have virtually unlimited access to capital, at funding costs that are below the rates otherwise available on the market. In layman’s terms, this means that Fannie does not have to register securities with the government, they do not have to pay state or local income taxes, and because the government sponsors the corporation, they are seen as a governmental entity when they really are not which has accounted for the large financial growth within the organization’s history along with a nearly limitless channel to capital (Mckinley 1998).
As was mentioned previously, the organization’s principal aim is to ensure the residential mortgage market is well funded. Indeed, within the past 31 years, Fannie Mae has provided over $2.8 trillion of mortgage financing (PR News 2000) and has helped over 63 million families obtain their dream of owning a home (Fannie Mae 2006). You cannot simply call up Fannie Mae and ask its loan officers about the going rate on a seven-year ARM; it doesn't loan money to retail home buyers. Instead, it provides liquidity for lenders by providing liquidity in the secondary mortgage market.
As a response to the calamity of the Great Depression, President Roosevelt sets forward the New Deal, a series of federal plans that began in 1933. It includes four primary goals: economic revival, job creation, public works investments and civic uplift. The First and Second New Deal have tremendous force during the Great Depression and extend its influences even up until the mod epoch.
The Great Depression of 1929 to 1940 began and centered in the United States, but spread quickly throughout the industrial world. The economic catastrophe and its impact defied the description of the grim words that described the Great Depression. This was a severe blow to the United States economy. President Roosevelt’s New Deal is what helped reshape the economy and even the structure of the United States. The programs that the New Deal had helped employ and gave financial security to several Americans. The New Deals programs would prove to be effective and beneficial to the American society.
"America's Great Depression and Roosevelt's New Deal."DPLA. Digital Public Library of America. Web. 20 Nov 2013. .
"Home Owners Loan Corporation." Next New Deal. Roosevelt Institute, 2014. Web. 16 Mar. 2014. .
After the depression America was in a state mass hysteria as the Wall Street crash had caused a massive crisis among the American public because the impact of the wall street crash caused 12 million people out of work, it also caused 20,000 companies to go bankrupt and there were 23,000 suicides in one year because of the wall street crash this was the highest amount of suicides in a year ever. The main aims of the new deal were Relief, Recovery and Reform, Relief was for the Homeless and Unemployed, recovery was for Industry, Agriculture and Banks and Reform was to prevent the depression form happening again. The structure of The New Deal was the First Hundred Days (1933) where he would focus on relief by helping the homeless and unemployed and recovery by helping industry, agriculture and banks, there was also the Second New Deal where he would focus on Reform, preventing the depression from happening again. Roosevelt believed that the government should help those people worst affected by the depression, this is why he created over 50 alphabet agencies to deal with the problems caused by the depression, this is why he introduced the new deal because he wanted to ease the pressure
In order to protect people’s benefits and provide a easeful life to people, Roosevelt started the New Deal followed his first inaugural address. When FDR gave his campaign speech at M...
It started off with momentum and true intentions to jumpstart the economy. Various relief programs were enacted with intent to help those who could not help themselves, to ease the burden of such a low quality of life created by the Great Depression. Eventually though, the New Deal ran out of steam, people were still waiting for relief after several years. They started to question the effectiveness of the New Deal, itself. Roosevelt started to find himself and his board of experts running out of ideas to improve the economy. It was only after the New Deal when the economy finally started to right
Coming into the 1930’s, the United States underwent a severe economic recession, referred to as the Great Depression. Resulting in high unemployment and poverty rates, deflation, and an unstable economy, the Great Depression considerably hindered American society. In 1932, Franklin Roosevelt was nominated to succeed the spot of presidency, making his main priority to revamp and rebuild the United States, telling American citizens “I pledge you, I pledge myself, to a new deal for the American people," (“New” 2). The purpose of the New Deal was to expand the Federal Government, implementing authority over big businesses, the banking system, the stock market, and agricultural production. Through the New Deal, acts were passed to stimulate the economy, aid banks, alleviate environmental problems, eliminate poverty, and create a stronger central government (“New”1).
A major funding agency that home buyers should take advantage of is the Federal Housing Administration, also known as the FHA. FHA provides mortgage insurance on housing loans that are funded by FHA approved lenders. The FHA will insure loans on single and multifamily homes located within the U.S. and its territories. The Federal Housing Administration is known worldwide for being the largest insurer for residential loans.
In his presidential acceptance speech in 1932, Franklin D. Roosevelt addressed to the citizens of the United States, “I pledge you, I pledge myself, to a new deal for the American people.” The New Deal, beginning in 1933, was a series of federal programs designed to provide relief, recovery, and reform to the fragile nation. The U.S. had been both economically and psychologically buffeted by the Great Depression. Many citizens looked up to FDR and his New Deal for help. However, there is much skepticism and controversy on whether these work projects significantly abated the dangerously high employment rates and pulled the U.S. out of the Great Depression. The New Deal was a bad deal for America because it only provided opportunities for a few and required too much government spending.
The banking industry is under pressure in today’s business climate. Banks have been through big changes. There is opportunity, but there is also increasing competition. To be the preferred bank means changing “good enough” into a unique value proposition. And that means changing the way people have always done things, change on this level requires cutting edge technology. Change cannot be achieved with a simple directive or surface adjustment especially within the banking industry. It requires an innovative rethink of the entire system, in a strong partnership between bank leaders and their change agents. New systems and policies must support the strategy to be successful. The real test of a good strategy implementation plan is whether the people understand the strategy, are motivated and enabled to implement it, and actually start achieving its goals.
President Franklin D. Roosevelt’s New Deal was a package of economic programs that were made and proposed from 1933 up to 1936. The goals of the package were to give relief to farmers, reform to business and finance, and recovery to the economy during the Great Depression.
The New Deal consisted of a host of programs. The Agriculture Adjustment Act actually paid farmers for cutting farm production, so that reduced supply would serve to raise prices of food grain. The Civilian Construction Corps was created in 1933 to provide work to people, by employing them to create trails and civil works in public parks. The Civil Works Administration was envisaged to create high paying jobs in the construction industry, but was shelved due to high cost to industry. To combat foreclosures on housing loans due to the Depression, the Federal Housing Administration was created to monitor mortgages and loans. This initiative was accompanied by creation of the Home Owner’s Loan Corporation, to assist in the refinancing of loans. The...
In terms of looking at how credit rating agencies affected the market as a whole, they played a role within the mortgage crisis as they gave way to a real estate credit bubble. The mortgage crisis seems to have b...
Mortgage loans are a substantial form of revenue for the financial industry. Mortgage loans generate billions of dollars in the financial industry. It is no secret that companies have the ability to make a lot of money by offering a variety of mortgage loan products. The problem was not mortgage loans but that mortgage companies were using unethical behavior to get consumer mortgage loans approved. Unfortunately, the Countrywide Financial case was not an isolated case. Many top name mortgage companies have been guilty of unethical behavior. Just as the American housing market was starting to recover from its worst battering since the Great Depression, a new scandal, an epidemic of flawed or fraudulent mortgage documents, threatens to send not just the housing market but the entire economy back into a tailspin (Nation, 2010).