The mortgage crisis and the world economy
The world economy is threatened by what some believe is most dangerous crisis since the depression of the 1930s: the mortgage crisis in the U.S.
The world's economy is threatened by what some believe is most dangerous crisis since the depression of the 1930s: the mortgage crisis in the U.S. In this edition of "The Changing World," Michael Robinson looks at the deepening international financial turmoil.
On July 31, President Bush signed into law a major package of housing legislation -- the law is intended the curb the spiraling number of foreclosures, and to help keep hundreds of thousands of Americans from losing their homes. It gives the Treasury Department authority to help the nation's two largest mortgage finance companies -- the Federal National Mortgage Association, or Fannie Mae and Freddie Mac, which is the Federal Home Loan Mortgage Corporation. Together, Fannie Mae and Freddie Mac hold or guarantee loans valued at five trillion dollars -- that's about half the mortgages in the nation.
Fannie Mae was created during the Depression, to make sure that mortgage lenders had sufficient funds. It was re-chartered by Congress in 1968 as a publicly-traded company. Freddie Mac was created by Congress in 1970 -- it's goal was to expand the secondary market for mortgages in the U.S. Recently, both institutions have reported steep losses as the housing market faltered.
Critics of the new law say that it won't do enough to help struggling home owners, and that the measure raises the national debt ceiling by 800 billion dollars.
In this edition of "The Changing World," Michael Robinson looks at the deepening international financial turmoil. Robinson explores why other nations are keeping a watchful eye on our housing troubles, and what U.S. lawmakers -- and homeowners -- are doing to keep this crisis from getting worse.
A special collaboration between BBC World Service and PRI's "The World," "The Changing World" is a series of powerful documentaries, each of which takes a long look at a single global issue, from geo-political hegemony to world health concerns.