History 1807 Lecture 4: Hist. Business- Sept 30
4 Nov 2015
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History of business- sept. 30 th , 2015. Riskier mortgage is now issued: 1930s the banks are regulated and began to be restricted. Banks are forced to have a reserve requirement: fannie mae is a government organization created that is designed to buy mortgages. Bank issues mortgages (commercial) giving a mortgage because government is given them the mortgage. Bank turns around and sells the mortgages to fannie mae. Fannie mae keeps the mortgages, which frees up the banks that don"t have to worry about the money of all the mortgages. Mortgages are used to create bonds and they begin to sell them. Allows wall street to buy mortgage back securities. Fannie mae is backed by the government. Fannie mae is there to free the banks of the burden of having a mortgage. In the late 1960"s, fannie mae would be privatized and be permitted to buy private mortgages. The government creates a new entity, the government.
