Question

Many economists link the 2008-2009 mortgage crisis and housing market slump to Fannie Mae and Freddie Mac lending practices that started in the mid-2000s. Others linked the crisis to inadequate oversight by federal regulators. And, still, others attempted to connect this crisis to federal legislation passed under the Clinton Administration that aggressively promoted low-income loans.   Furthermore, there has been an increasing level of political debate that Fannie and Freddie should be abolished. What is your opinion: should Fannie and Freddie be abolished? Justify your comments.  

Answer 1

There were many causes behind the economic crisis of 2008, but the Fannie and Freddie were one of them. The Fannie and Freddie are the government sponsored financial institutions who are engaged in the subsidizing the housing sectors. It estimated that over the 200 billion dollar is spent on the subsidizarion of housing sector in the USA.

Furthermore, the most of subsidies go to richer class who are earning more than the 250000 dollar per annum. The low income class is not capable enough to get the benefits of government subsidies .

These subsidies must be reduced and the money subsidizarion amount can diverted towards the more productive activities. The spending can be made on the education , health and development. Thus it makes the case for the elimination of faddie and Frannie.