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Fannie Mae was established in order to provide local banks with federal money to finance home mortgages in an attempt to raise levels of home ownership and the availability of affordable housing.

Within the secondary mortgage market, companies such as Fannie Mae are able to borrow money from foreign investors at low interest rates because of the financial support that they receive from the U.S. Government. It is this ability to borrow at low rates that allows Fannie Mae to provide fixed interest rate mortgages with low down payments to home buyers. Fannie Mae makes a profit from the difference between the interest rates homeowners pay and foreign lenders charge.

Currently, Fannie Mae and Freddie Mac control about 90 percent of the nation's secondary mortgage market.

only two Fortune 500 companies that are not required to inform the public about any financial difficulties that they may be having.

U.S. taxpayers could be held responsible for hundreds of billions of dollars in outstanding debts.

• Competitors were "snatching lucrative parts" and market share away; • Between 2001-04, the subprime mortgage market grew from $160 to $540 billion • Between 2005-08, Fannie purchased or guaranteed at least $270 billion in loans to risky borrowers.  • By 2004, Fannie had lost 56% of its loan-reselling business to Wall Street; • Angelo Mozilo, Countrywide Financial CEO, the nation’s largest mortgage lender, threatened to end their partnership unless Fannie started buying Countrywide’s riskier loans; • Congress was pressuring for more loans to low-income borrowers; • Hedge fund managers and other investors pressured Fannie executives that the company was not taking enough risk in pursuing profits; • Like many other firms, Fannie’s computer systems did a poor job of analyzing risky loans; • Between 2005-07 -- afte rthe market's peak -- Fannie's acquisitions of mortgages with less than 10% down payments almost tripled; • Fannie expanded in hot real estate areas like California and Florida; • From 2004-06, Fannie operated without a permanent chief risk officer;

increasing pressure from Bill Clinton's administration on Fannie Mae and Freddie Mac to increase lending quotas to minorities and middle and low-income home buyers in so- called "under-served" areas (usually inner cities).

being pushed by the Federal Housing initiatives Fannie & Freddie, private banks and the rest of the players in the housing and mortgage industry jumped on sub-prime bandwagon seeing only big profits ahead.

answer is correct destructive and dangerous housing practices and introduce more transparency and accountability for the banking sector.

Lehman Rocks Wall Street, Declares Bankruptcy

The Treasury Department and Federal Reserve watched Lehman implode, unable to predict the scope of the global financial damage that would follow.

While Lehman Brothers failed to find a buyer, Merrill Lynch succeeded

Merrill’s CEO Stan O’Neal was so fixated on the revenue generated by the mortgage business, he didn’t just want to securitize them, he wanted to originate them, too. So, in 2007, Merrill bought mortgage lender First Franklin.

Bank Of America Rescues Merrill From ExtinctionBy September 2008, Merrill Lynch was suffering huge mortgage-related losses.

Although Bank of America’s purchase of Merrill ultimately saved the company, the transaction later came under intense scrutiny because of larger-than-expected losses and controversial year-end bonuses paid to Merrill executives.

Fed Accused Of 'Cover Up' In BofA, Merrill Deal

“Too Big To Fail,” Feds Take Control Of AIG

Paulson And Bernanke Issue Dire Warning

Paulson requested $700 Billion from Congress for a program intended to buy toxic assets from banks and infuse financial institutions with capital

contained no rules and standards for oversight. Infuriated politicians

Washington Mutual, weighed down by mortgage-related losses, was seized by federal regulators and sold to JPMorgan Chase.

largest bank failure in U.S. history, caused by an old fashioned, Depression-like run on WaMu’s deposits, following rumors about the bank’s ability to survive. 

Dow Jones Industrial Average plunged a record 778 points, its biggest drop in history.

Congress acted again. This time, lawmakers  approved the package, known as the Troubled Asset Relief Program. It included significantly greater oversight of the $700 Billion and more specific details on how it would be used to bolster the U.S. banking system.

Paulson’s “tough love” was a bitter pill for some bank bosses to swallow.

BofA became the largest mortgage lender after it agreed to purchase troubled mortgage giant Countrywide Financial in 2008. It’s mostly loans originated by Countrywide that are viewed as the biggest problem for Fannie and Freddie.