# Fannie Mae **Fannie Mae** (the Federal National Mortgage Association) is the larger of the two **government-sponsored enterprises (GSEs)** at the center of American housing finance. Created in 1938 as a New Deal agency to keep mortgage credit flowing through the Depression and spun into a publicly-traded company in 1968, it does not lend to homebuyers directly; instead it **buys mortgages from lenders, guarantees them, and packages them into mortgage-backed securities** — providing the liquidity that makes the 30-year fixed-rate mortgage possible. Fannie's defining feature is its **hybrid public-private structure**: a shareholder-owned company that long enjoyed an *implicit* federal guarantee. Markets always assumed Washington would never let it fail, so it could borrow cheaply and operate at extreme leverage — a textbook standing source of [[Moral Hazard (Term)]]. That assumption was vindicated on **September 7, 2008**, when, days before the [[Lehman Brothers]] collapse, the federal government placed Fannie Mae and [[Freddie Mac]] — together backing roughly $5.4 trillion in mortgage obligations — into **conservatorship** under the newly-created Federal Housing Finance Agency. The Treasury ultimately injected about $187 billion into the two GSEs (since repaid and exceeded), and they remain in conservatorship today. For the KB, Fannie Mae is the live battlefield of the **crisis-blame narrative**. A persistent strand of the right argues the GSEs and federal affordable-housing mandates *caused* the [[2008 Financial Crisis]] by pushing loans to unqualified borrowers — a framing that shifts blame from Wall Street deregulation toward government and, in some tellings, toward minority borrowers. Most mainstream analyses find the GSEs were followers rather than leaders of the subprime boom (private-label securitizers drove the worst lending), but the dispute remains central to how the crisis is politically remembered. Fannie is also the purest example of the implicit-guarantee problem the [[The Banking System]] keeps generating. ## See Also - [[Freddie Mac]] - [[The Banking System]] - [[Moral Hazard (Term)]] - [[2008 Financial Crisis]] - [[Financial System Timeline]] - [[Financial System Hub]]