Hedge funds, leverage and mortgages: why Fannie and Freddie's new deals worry some experts

Chris Acito at Gapstow Capital Partners
Chris Acito, Gapstow Capital Partners

Politicians in the US are working on blueprints for a revamped housing finance system, in which private investors become the primary insurer of mortgage credit risk – a market that could amount to $250-450 billion over a five-year period, according to estimates. But while the haggling continues, a dry run is already taking place, and some observers don’t like what they see.

Over the past nine months, Fannie Mae and Freddie Mac – the tarnished government-sponsored enterprises (GSEs) that will be

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