Fannie Mae and Freddie Mac Case Flashcards

1
Q

What year was Fannie Mae created?

A

1938

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2
Q

Why was Fannie Mae created?

A

They wanted to make affordable housing more available and to encourage greater investment in real estate market

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3
Q

What is Fannie Mae?

A

It’s a shareholder-owned corporation with a federal charter

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4
Q

What year did Fannie Mae switch from federal to privately owned?

A

1968

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5
Q

What was Fannie Mae target audience when they become privately owned?

A

First-time buyers and minorities

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6
Q

How long did Fannie Mae have double digit earnings?

A

For a decade

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7
Q

What was Fannie Mae’s total profits from 2001-2004?

A

$24 billion

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8
Q

How much was Fannie Mae’s stocks trading for in 2004?

A

Over $80 per share

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9
Q

What was Fannie Mae named in 2004?

A

The most ethical company

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10
Q

What did Fannie Mae do to the numbers?

A

They fudged numbers just enough to make a commission earnings bonus

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11
Q

What happened to Fannie Mae in 2005?

A

The had a meeting with the SEC and their CEO and CFO were removed by the board

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12
Q

Who become Fannie Mae’s new CEO in 2005?

A

Daniel Mudd

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13
Q

What did Mudd lead Fannie Mae to do?

A

To guarantee $270 billion in risky loans

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14
Q

What major event happened in 2008?

A

The stock market crashed

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15
Q

What happened to Fannie Mae because of the stock market crash?

A

The government had a $200 billion buyout and the company went back to being government owned

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16
Q

What did Fannie Mae’s actions of fudged numbers cause?

A

Their earnings management to become fraudulent

17
Q

Who discovered Fannie Mae’s fraudulent actions?

A

Roger Barnes

18
Q

List 4 primary people involved in the Fannie Mae case

A
  1. Fannie Mae’s employees
  2. Daniel Mudd
  3. Roger Barnes
  4. SEC
19
Q

What are the 3 ethical dilemmas used in the Fannie Mae case?

A
  1. Ethical Egoism
  2. Virtue Ethics
  3. Warren Buffet