Federal Reserve Board Chairman Ben Bernanke discussed alternative mechanisms for supporting the mortgage market other than the unlimited implicit guarantee that it had given to Fannie Mae and Freddie Mac.
While it is certainly reasonable to ask whether the government role in the mortgage market can be better structured, the government also has given an implicit (now largely explicit) guarantee to the creditors of all the major banks. Fannie Mae and Freddie Mac do not seem to hold any special status given current policy.
It would have been appropriate for the media to note the government's guarantee of debt at all major financial institutions (except Lehman Brothers) when discussing Bernanke's comments. Many readers might have been wrongly led to believe that the government's guarantee for Fannie and Freddie was the exception rather than the rule.
Unlike many news organizations, the Prospect has remained staunchly committed to keeping our journalism free and accessible to all. We believe that independent journalism is crucial for a functioning democracy—but quality reporting comes at a cost. From Trump’s threat to the free press to Musk’s influence on our democracy, there is too much at stake in 2025 to stop now.
We’re behind on our goal to raise $75,000 to continue delivering the hard-hitting investigative journalism you’ve come to expect from us. Your support helps us maintain our independence and dig deeper into the stories that matter most.
We need you to make a year-end contribution today. Any amount helps secure our future and ensure we can continue holding power to account.