Federal government involvement in secondary mortgage market

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Secondary Mortgage Market is the market created by US gov’t to boost the economy during the great depression. After FIs originate mortgages, they either sell or securitize them in the secondary market. U.S. government was deliberately involved in the development of the secondary mortgage market.

Why? What is Federal government’s involvement in the secondary mortgage market? Does government sponsoring induces excessive risk-taking behavior? Is fully privatizing a better option?

Reference no: EM131182760

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