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 FINANCIAL CRISIS INQUIRY COMMISSION REPORT

Buyers of Non-GSE Mortgage-Backed Securities
The GSEs purchased subprime and Alt-A nonagency securities during the 2000s.
These purchases peaked in 2004.
IN BILLIONS OF DOLLARS
Subprime Securities Purchases Alt-A Securities Purchases
$500
Freddie Mac
Fannie Mae
Other purchasers
400

300

200

100

0
’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08 ’01 ’02 ’03 ’04 ’05 ’06 ’07 ’08
SOURCES: Inside Mortgage Finance, Fannie Mae, Freddie Mac

Figure .

several cases, help Fannie meet its subgoals—specific targets requiring the GSEs to
purchase or guarantee loans to purchase homes. In , Fannie missed one of these
subgoals and would have missed a second without the securities purchases; in ,
the securities purchases helped Fannie meet those two subgoals.
The pattern is the same at Freddie Mac, a larger purchaser of non-agency mort-
gage–backed securities.  Estimates by the FCIC show that from  through ,
Freddie would have met the affordable housing goals without any purchases of Alt-A
or subprime securities, but used the securities to help meet subgoals. 
Robert Levin, the former chief business officer of Fannie Mae, told the FCIC that
buying private-label mortgage–backed securities “was a moneymaking activity—it
was all positive economics. . . . [T]here was no trade-off [between making money and
hitting goals], it was a very broad-brushed effort” that could be characterized as
“win-win-win: money, goals, and share.”  Mark Winer, the head of Fannie’s Busi-
ness, Analysis, and Decisions Group, stated that the purchase of triple-A tranches of
mortgage-backed securities backed by subprime loans was viewed as an attractive
opportunity with good returns. He said that the mortgage-backed securities satisfied