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The Fannie Mae And Freddie Mac Bailout Explained

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This Fannie Mae and Freddie Mac thing is complicated! So let’s begin at the very beginning.

Most of us put our money in banks. Often, we want to be able to take our money out of the banks—but we also keep some money there! (I told you we were beginning at the beginning.) Meanwhile, banks use our money as their own assets. So when people come to a bank to borrow money, they are—or were—using the money that other people are keeping there. Once upon a time, banks conducted their own loans, based upon the money they kept there!

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