Provided credit unions can guarantee the access to a private secondary mortgage market that banks have, CUs should back the eventual privatization of the Government Sponsored Entities Fannie Mae and Freddie Mac.
That is the conclusion reached by David Reiss, JD, a professor of law at Brooklyn Law School and the author of "Fannie Mae and Freddie Mac: Implications for Credit Unions," the latest research paper from the Filene Research Institute.
"Credit unions benefit from the access to the secondary market that Fannie and Freddie provide, but they could be better served by a secondary market with more competition so long as they maintain their access on par with that of larger financial institutions," Reiss wrote.
In the paper, Reiss outlines the benefits and drawbacks of a number of different ways to reform and reconstitute the GSEs, outlining their potential risks and rewards for credit unions.
