Financial Stability Oversight Council Warns Of Risks From Fannie Mae And Freddie Mac

Financial Stability Oversight Council Warns Of Risks From Fannie Mae And Freddie Mac

ASSOCIATED PRESS

Last week, the Financial Stability Oversight Council formally acknowledged that Fannie



FNMA

Mae and Freddie Mac, the two housing finance giants that imploded in 2008, pose a risk to the financial system and even to the broader economy. The announcement is much more than a revelation of the world's worst kept secret because the council consists of all the major U.S. financial regulators and has the power to designate financial firms for extra stringent regulations.

The significance was not lost on Mark Calabria, director of the Federal Housing Finance Agency (FHFA), who commended the council for “its historic acknowledgement.”

The council's announcement is historic because federal officials regularly pretended that the two GSEs were perfectly safe for decades prior to