The importance of Freddie Mac and Fannie Mae

Fannie Mae and Freddie Mac are central to the US housing market

Simon Atkinson, Business reporter, BBC News - 14 July 2008

When UK lender Northern Rock hit difficulties last year, the queues forming outside its branches across the UK provided a very visual image of the problems that it faced.

A few months later the beleaguered bank was taken into government hands after it was nationalised, with loans worth £100bn on its balance sheet.

It was doubtless a disaster for shareholders, the Rock and the government - but is perhaps put into perspective by the troubles faced by Freddie Mac and Fannie Mae.

Together, the two firms own or guarantee about $5.3 trillion (£2.7 trillion) worth of home loans - about half the outstanding mortgages in the US.

That is about 25 times as big as the Rock’s obligations, and twice the size of the UK economy - full article