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A Bad Situation Was Made Worse

The Fannie-Freddie bailout is a bad idea and won't work. But for some, it's the only answer. Why?

By Staff Writer | Updated on September 16, 2008

The Fannie-Freddie bailout is a bad idea and won’t work. But for some, it’s the only answer. Why?

Fannie and Freddie guarantee about half the U.S. mortgage market. If they simply go away, so does the conduit for some $5 trillion in home loans. The implications are dire: mortgage rates rise because lenders would have to hold mortgages on their books, and they’ll want to get paid for that. Homeownership falls.

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