Crashed: How a Decade of Financial Crises Changed the World

by Adam Tooze

As compared with $1 trillion in new mortgages issued in 2001, in 2003 mortgage origination soared to $3.8 trillion, of which $2.53 trillion were for refinancing. In this huge boom the GSEs were still the major players. They continued to monopolize the prime mortgage segment. Their share of the market reached its maximum point in 2003 at 57 percent. But at that point it stalled. In the huge surge of business in the early 2000s not everything at the GSEs was aboveboard. Accounting and regulatory irregularities piled up. Fearful of another Enron, regulators subjected first Freddie Mac and then Fannie Mae to capital surcharges. They either had to raise new capital or contract their balance sheets. To make sure it was the latter, caps were imposed on their total balance-sheet size.39 The door to the private issuers was opened.