now appears that the Federal National Mortgage Association ("Fannie
Mae") and the Federal Home Loan Mortgage Corporation ("Freddie Mac") are
subject to the same kind of bruising losses afflicting other large
financial institutions as a result of sub-prime mortgage-related
investments. James M. Wilson discusses the effect of that risk exposure,
and of the alleged involvement of Fannie Mae and Freddie Mac in the
artificial inflation of home appraisal values, on the housing market's
near-term future. Mr. Wilson writes that "the recent disclosures,
investigations and lawsuits are all too familiar to Fannie Mae and
Freddie Mac investors and have dampened expectations that the GSEs could
bailout the suffering housing market."
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