The U.S. Treasury put Fannie Mae (FNMA) and Freddie Mac (FMCC) into a financial limbo called ‘conservatorship’ in 2008 at the height of the financial crisis. President Obama and the slew of candidates seeking to succeed him may be avoiding this highly partisan topic, but American investors should not because the fate of these entities directly affects their portfolios, said Bethany McLean, author of Shaky Ground. 'The mortgage-backed securities that they issue, it is debt backed by the mortgages of Americans and there is about $5 trillion of it outstanding today,' said McLean. 'It moves through the global capital markets like water. It’s everywhere.' McLean is the co-author of the bestseller The Smartest Guys in the Room: The Amazing Rise and Scandalous Fall of Enron with her Fortune magazine colleague Peter Elkind. She also co-authored All the Devils are Here: The Hidden History of the Financial Crisis along with NY Times columnist Joe Nocera. McLean said these government sponsored entities (GSE) have been political pariahs because capitalists and free-market proponents do not want the government playing a role in the housing market. Some claim that the pair caused the housing crisis. She added that Fannie and Freddie executives have historically been richly rewarded, turning the companies into political footballs. Simply put, McLean said Fannie and Freddie’s decisions to dive into the subprime mortgage world at exactly the wrong time doomed them to bankruptcy.

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