Without Government Backing, No One Will Loan?
In congressional testimony the head of Fannie Mae said that without the GSE's bundling of mortgage backed securities, and the "implied" US government backing, the Chinese and other major buyers would likely halt purchases.
"'Fannie Mae "has drawn in billions of dollars from investors abroad to expand the availability and lower the cost of housing for low- and moderate-income Americans,' Mudd said. 'It is not at all clear that those foreign investors would place their money in the U.S. housing market without the predictability and convenience provided by' debt issued by Fannie Mae and smaller rival Freddie Mac."
After months of posturing, we may finally be getting down to brass tacks, which could be why the markets are in trouble.
This line causes one to question who is in charge. "The two companies have for years fended off congressional attempts to crimp their privileges or rein in their operations." It is more probable that congress didn't try too hard as the members enjoyed the easy money.