The financial crisis of 2007-2008 was the most financially detrimental event since the Great Depression, which had a great effect on investment and banking systems; leading to a recession. One company in particular largely involved was Freddie Mac. Freddie Mac, also named the Federal Home Loan Mortgage Corporation, is a public government sponsored enterprise and designed to expand the secondary market mortgages in the U.S. alongside Fannie Mae (prmia.org). Further discussion will include events leading up to the crisis, how Freddie Mac played a role in the crisis, a personal opinion on who is to blame for the crisis, and relating material back to discussion in class. According to Federal Reserve Bank of St. Louis, “As of February 27, 2007,
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They are very similar in that they are both government- sponsored enterprises, both in the home mortgage industry that have the same business model and are a part of a process which helps move money throughout the housing economy, allowing more people to afford homes that couldn 't be possible without them. Looking more at Freddie Mac and what it stands for, they mostly buy mortgage loans from smaller banks. Ever since the government bailed out Freddie Mac during financial crisis, the government has has more direct say in the business. Because Freddie Mac had such an influence on the economy, it is considered “too big to fail” which according to Boris Polania means, “In short it meant that those companies were so big that if they failed the economy would be deeply affected to a point where recovery would be extremely …show more content…
One thing I have noticed in macroeconomics class how one particular decision or the way people are spending or saving their money can completely turn the economy around for better or worse. I also believe the Great Depression had great influence on this financial crisis in learning what we did wrong in the past and what choices to make to avoid future turmoil. The fact that we were able to eliminate our worst fear of another depression shows growth and
They are very similar in that they are both government- sponsored enterprises, both in the home mortgage industry that have the same business model and are a part of a process which helps move money throughout the housing economy, allowing more people to afford homes that couldn 't be possible without them. Looking more at Freddie Mac and what it stands for, they mostly buy mortgage loans from smaller banks. Ever since the government bailed out Freddie Mac during financial crisis, the government has has more direct say in the business. Because Freddie Mac had such an influence on the economy, it is considered “too big to fail” which according to Boris Polania means, “In short it meant that those companies were so big that if they failed the economy would be deeply affected to a point where recovery would be extremely …show more content…
One thing I have noticed in macroeconomics class how one particular decision or the way people are spending or saving their money can completely turn the economy around for better or worse. I also believe the Great Depression had great influence on this financial crisis in learning what we did wrong in the past and what choices to make to avoid future turmoil. The fact that we were able to eliminate our worst fear of another depression shows growth and