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#1 The creation of the mortgage-backed security allowed Wall Street to scoop up loans made to people who were buying homes, and then resell the bundle to investors.

#2 The American Dream is synonymous with homeownership. Government policy has long encouraged homeownership, and it has been a statement about values as well as upward mobility.

#3 Fannie Mae and Freddie Mac were two important agents of government homeownership policy. They were both insulated from criticism. Fannie was born during the Great Depression, and its original role was to buy up mortgages that the Veterans Administration and the Federal Housing Administration were guaranteeing.

#4 Wall Street developed securities that were much more appealing to investors than Ginnie Mae or Freddie Mac bonds. Tranching, or splitting the bond into different categories based on risk, was one method. The rating agencies became an important part of the process.

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E-raamat: 12. juuli 2022