Question

what risk does Fannie Mae face if they became privately owned (not by the goverment)

Answer 1

The two entities along with the Federal Housing Administration originate about 90% of all housing mortgages. If Fannie Mae and Freddie Mac go private, there will be concerns about the risks tax payers are exposed to. The problem is what happens when you have an implicit or explicit government guarantee and private shareholders. Private shareholders will take lots of risk. Without sufficient capital requirements and other controls, tax payers eventually will end up on the hook for large bailouts.