Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards: [Essay Example], 436 words GradesFixer
exit-popup-close

Haven't found the right essay?

Get an expert to write your essay!

exit-popup-print

Professional writers and researchers

exit-popup-quotes

Sources and citation are provided

exit-popup-clock

3 hour delivery

exit-popup-persone
close
This essay has been submitted by a student. This is not an example of the work written by professional essay writers.

Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards

Print Download now

Pssst… we can write an original essay just for you.

Any subject. Any type of essay.

We’ll even meet a 3-hour deadline.

Get your price

121 writers online

blank-ico
Download PDF

Fannie Mae is a business entity where ownership was controlled or partnered by the shareholder. It was developed in 1938 by the federal government. The main strategy is to encourage people to invest in the housing market. The company wants to make a stability in mortgage, and make sure customers approach them to purchase and also, they introduced a loan which could help them to invest initially. Since a decade the margin of earning reached $895 billion in the mortgage portfolio. They also partnered with many small-scale companies and invested in Barne’s. There was an allegation about investments and ideas of Fannie Mae’s in Wall street journal. Yet, no actions were taken by the superiors regarding this issue. Later in 2003, Daniel Muddi CEO raised about it among employees, yet he failed to solve it.

Another major problem is accounting in Fannie Mae’s policies which made them invest, buying and holding in mortgage loans which were developed by CFO with no proper analyses about future threats which may pull companies fame and money into risk. They came up with a philosophy to attract people to invest in the mortgage market. They introduced a computer model with “arbitrary volatility” which turned out a different methodology to understand and implement. Much higher management couldn’t understand what it does with earnings. They have some fixed rates and interest when they are conveying to the customers but in the end, it differs and made a problem.

Decisions taken by Mr. Howard who is the CFO have mainly two strategies in the plan. One is to set targets to perform in that financial year and next is to analyze it to meet up to it. But, In the year 1998, he changed the way of his operations by setting EPS goals with the company charge sheets which resulted in unstable earnings. In return, they received a warning about their accounting which they need to report internal controls and strategies. All these issues raised a question on ethical behavior of officers in Fannie’s.

Later New York Attorney needed to resign because of the truths which came about the Fannie Mae scandal. They make a policy to shift $40 million income in radian insurance, by knowing all these no one dares to take action or question them, everything went according to their plan. Later because of unethical behavior of Fannie employees and policies company went with more mortgages and some internal income crisis which lead them to pay $200 billion to the federal government to restore Fannie. Because of mortgage loans which went with too risky and no proper guidelines made then to reconstruct the firm.

Remember: This is just a sample from a fellow student.

Your time is important. Let us write you an essay from scratch

100% plagiarism free

Sources and citations are provided

Cite this Essay

To export a reference to this article please select a referencing style below:

GradesFixer. (2019, April, 10) Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards. Retrived October 16, 2019, from https://gradesfixer.com/free-essay-examples/fannie-freddie-wall-street-main-street-and-the-subprime-mortgage-market-of-moral-hazards/
"Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards." GradesFixer, 10 Apr. 2019, https://gradesfixer.com/free-essay-examples/fannie-freddie-wall-street-main-street-and-the-subprime-mortgage-market-of-moral-hazards/. Accessed 16 October 2019.
GradesFixer. 2019. Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards., viewed 16 October 2019, <https://gradesfixer.com/free-essay-examples/fannie-freddie-wall-street-main-street-and-the-subprime-mortgage-market-of-moral-hazards/>
GradesFixer. Fannie, Freddie, Wall Street, Main Street, and the Subprime Mortgage Market: Of Moral Hazards. [Internet]. April 2019. [Accessed October 16, 2019]. Available from: https://gradesfixer.com/free-essay-examples/fannie-freddie-wall-street-main-street-and-the-subprime-mortgage-market-of-moral-hazards/
close

Sorry, copying is not allowed on our website. If you’d like this or any other sample, we’ll happily email it to you.

By clicking “Send”, you agree to our Terms of service and Privacy statement. We will occasionally send you account related emails.

close

Thanks!

Your essay sample has been sent.

Want us to write one just for you? We can custom edit this essay into an original, 100% plagiarism free essay.

thanks-icon Order now
boy

Hi there!

Are you interested in getting a customized paper?

Check it out!
Having trouble finding the perfect essay? We’ve got you covered. Hire a writer

GradesFixer.com uses cookies. By continuing we’ll assume you board with our cookie policy.