Something has to give. Fannie Mae and Freddie Mac - America's
colossal home mortgage securitizers - have been growing at about
11.5% per year. That's much faster than the market they serve: the
underlying market for home mortgages in America is growing at only
about 6% per year.
So, Fannie and Freddie are going run into a problem, not very
far down the road. Peter Wallison, a resident fellow at the
American Enterprise Institute, and Bert Ely, an American banking
consultant, estimate that Fannie and Freddie are on track to assume
the credit risk for almost half the residential mortgages in
America by the end of 2003. And Fannie and Freddie will have
acquired all the mortgages available within a short time after
that.
"The question then will be how can Fannie and Freddie get out from
under the government's thumb so that they can continue to grow,"
says Wallison. Fannie and Freddie,...
