CHAPTER 12Private Label Takes Center Stage

FANNIE MAE’S STUDIED TIGHTENING OF RISK DISCIPLINES IN THE summer of 2003 stood in marked contrast to what had been happening in the subprime mortgage market and with private-label securitization in the years leading up to that point. There, lending practices, capital disciplines, and government oversight all had been noticeably relaxed.

Subprime Resurrected

Subprime lending barely paused following the 1999 collapse. Large lenders and their regulators concluded that the subprime implosion was not the result of the characteristics of the loans in that market, its lack of regulation, or any flaws in the securitization mechanism it used, but rather was the result of the financing dependencies and poor management ...

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