The most severe recession since the Great Depression partially resulted from pro

Question

The most severe recession since the Great Depression partially resulted from problems in the market for home mortgages. What has been the U.S. government's response? In response to problems in the market for home mortages, the federal government A. brought Fannie Mae and Freddie Mac under direct government control. B. outlawed investment banks from being organized as partnerships. C. expanded the types of assets banks and financial institutions can hold. D. prevented financial firms from being both commerical and investment banks. E. allowed commerical banks to underwrite the issuance of stocks and bonds.

Explanation / Answer

A. brought Fannie Mae and Freddie Mac under direct government control.

Reason

The federal takeover of Fannie Mae and Freddie Mac was the placing into conservatorship of the government-sponsored enterprises Federal National Mortgage Association and Federal Home Loan Mortgage Corporation by the U.S. Treasury in September 2008. It was one of the financial events among many in the ongoing subprime mortgage crisis.

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