Of all the interventions, the guarantee to use public funds to support Fannie Mae and Freddie Mac was the most unprecedented. Fannie Mae and Freddie Mac were two government-sponsored enterprises (GSEs), created by Congress in 1938 and 1970 respectively, with the former being part of Roosevelt’s New Deal following the Great Depression. They were created to stabilize the US mortgage market and promote affordable housing. They did this primarily by buying mortgages from approved private lenders, packaging many together, guaranteeing timely payment on them, and then selling them back to investors.
