Why did government-sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae have substantially higher leverage ratios

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Why did government-sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae have substantially higher leverage ratios than the average U.S. bank in the years preceding the financial crisis of 2007-2009? Explain how this made the enterprises more vulnerable to the house-price declines that precipitated the crisis.

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Money Banking and Financial Markets

ISBN: 978-0078021749

4th edition

Authors: Stephen Cecchetti, Kermit Schoenholtz

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