What is the primary role of Fannie Mae and Freddie Mac?

• A. Overseeing credit card markets.
• B. Providing liquidity to mortgage markets and supporting affordable housing financing.
• C. Regulating national banks.
• D. Issuing government savings bonds.

Answer: (B)

Their main job is to provide liquidity to mortgage markets and support affordable housing financing. Fannie Mae and Freddie Mac achieve this by buying mortgages from lenders and packaging them into mortgage-backed securities, which are sold to investors. They guarantee timely payment of principal and interest to those investors, which reduces risk and makes funding more reliable. This process frees up lenders’ capital, letting them offer more home loans at lower costs, and it helps expand access to homeownership, especially for borrowers with moderate or lower incomes through affordable-housing initiatives.

The other options describe functions outside their scope: overseeing credit card markets is handled by consumer financial protection and banking regulators; regulating national banks is the job of federal banking regulators; issuing government savings bonds is done by the U.S. Treasury.