Even as the loan crisis could be eased for now, the historical significance — it is the largest government intervention into a private market in U.S. history — is still taking shape. Professor Lynne Sagalyn, director of the Paul Milstein Center for Real Estate, offered insight on the legacy of Fannie Mae:
The government takeover of Fannie and Freddie marks a stunning event in the historical legacy of these financial institutions. Fannie began life as an innovative policy experiment; its creation was designed to foster uniform availability of credit across the nation in an era of regional credit imbalances and develop a national secondary mortgage market when such trading of originated mortgages did not exist. These institutional innovations brought down the cost of mortgage credit, thereby expanding housing affordability and homeownership to millions of Americans. And Fannie benefited renters as well, through its provision of low-cost capital to the multi-family rental sector. Rather than see this policy innovation as a “failure,” we would do well to keep in mind its historical positive contribution to a housing finance system on the day of this sad and disappointing news.
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