PropertyProf Blog

Reiss on Fannie Mae and Freddie Mac

David J. Reiss (Brooklyn Law School) has posted Fannie Mae and Freddie Mac: Privatizing Profit and Socializing Loss on SSRN.  Here's the abstract:

This book chapter describes the role of Fannie Mae and Freddie Mac in the ongoing financial crisis. The chapter first explains the hybrid public-private nature of Fannie and Freddie, which are what is known as Government Sponsored Enterprises (GSEs). Fannie and Freddie were originally chartered by the federal government to create a national mortgage market. The chapter then explains how the two GSEs morphed into extraordinarily large companies that profited enormously from their special relationship with the federal government, while providing only modest benefits to American homeowners. In what turned out to be a disastrous trade-off for American taxpayers, Fannie and Freddie ended up needing a bailout measured in the hundreds of billions of dollars. Ultimately, Fannie and Freddie exhibited the common failings of poor GSE design — after fulfilling their original purpose, they took on monstrously large lives of their own that defied political oversight. The chapter concludes that Fannie and Freddie should be privatized, with their remaining public functions assumed by pure government actors.

Ben Barros

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Finders Not Keepers in Lottery Ticket Case

AOL News has an interesting story about a finding case in England where a couple who found a winning lottery ticket were forced to return the money (at least the portion they hadn't spent) to the original owner, who had dropped it.  The story, and an accompanying poll, suggest the continued impact of the "finders keepers" cultural myth -- a majority of poll respondents say that the finders should have been able to keep the money won with the ticket.

Ben Barros

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