Tag Archives: fannie mae and freddie mac

Intro to TARP: Banks have two problems

The big banks (and some large non-banks like AIG, Fannie Mae, and Freddie Mac) have two problems, not one: They don’t have enough capital. They have on their balance sheet downside risk that is creating uncertainty about how much the firm is worth and is scaring away investors. I will use a simple example constructed by [...]

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