Kenneth C. Greene,
Attorney,
Law Offices of Kenneth Charles Greene

This second edition of Monitoring the Monitor discusses how the actions and inactions of the FDA, Fannie Mae and Freddie Mac could impact your business, your life and your livelihood.

THE FOOD AND DRUG ADMINISTRATION
The Food and Drug Administration (FDA) is a federal agency of the Department of Health and Human Services. It was formed in 1927 as the successor to the Division of Chemistry of the U.S. Department of Agriculture, and was originally named the Food, Drug and Insecticide Administration! The FDA is led by a commissioner who is appointed by the president with the advice and consent of the Senate. The commissioner reports to the Secretary of Health and Human Services. Sara Brenner is the current acting commissioner as of Jan. 24, 2025, following the resignation of former commissioner, Robert Califf.

The FDA is responsible for the protection and promotion of public health through the control and supervision of food safety, tobacco products, caffeine products, dietary supplements, prescription and over-the-counter pharmaceutical drugs, vaccines, biopharmaceuticals, blood transfusions, medical devices, electromagnetic radiation emitting devices, cosmetics, animal foods and feed, and veterinary products.

Even if you are not financing the cannabis industry, the reach of the FDA and its impact on the economic sector should not be underestimated. Since the general health and welfare of the 304.1 million people in the country are the cornerstones of the country’s financial and economic health, the FDA’s role in deciding on food and drug availability, pricing and the like are critical to a successful financing sector.

FEDERAL NATIONAL MORTGAGE ASSOCIATION (FNMA)
The Federal National Mortgage Association, commonly known as Fannie Mae, is a U.S. government-sponsored enterprise. It has been a publicly traded company since 1968. Founded in 1938 during the Great Depression as part of the New Deal, the company’s purpose is to expand the secondary mortgage market by securitizing mortgage loans in the form of mortgage backed securities, allowing lenders to reinvest their assets into more lending. This has the effect of increasing the number of lenders in the mortgage market by reducing reliance on savings and loan associations and thrift and loans. Its brother organization is the Federal Home Loan Mortgage Corporation (FHLMC), better known as Freddie Mac (see below).

Fannie Mae was established by Congress through amendments to the National Housing Act as part of FDR’s New Deal. Originally chartered as the National Mortgage Association of Washington, the organization’s explicit purpose is to provide local banks with federal money to finance home loans to raise levels of home ownership and the availability of affordable housing.

The head of Fannie Mae, officially called the CEO, is appointed by its board of directors, who select a candidate based on qualifications and experience. The current CEO is Priscilla Almodovar. However,
Fannie Mae is presently under conservatorship since the 2008 financial crisis led to massive losses, putting the company at risk of bankruptcy. This prompted the government to take control to stabilize the mortgage market and prevent its collapse.

The conservatorship is managed by the Federal Housing Finance Agency (FHFA). Consequently, despite having its own appointed CEO, the board of directors ultimately operates under the direction of the FHFA director, meaning it is effectively overseen by the government agency. As of 2024, Fannie Mae had more than $4.3 trillion in assets, making it the largest company in the U.S. as measured by assets.

Similar to the reason the FDA is important to the financial sector, the health of the housing market is integral to a vibrant economy. The health of Fannie Mae is an excellent litmus test for that fiscal
barometer.

FEDERAL HOME LOAN MORTGAGE CORPORATION (FHLMC)
The Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, is a publicly traded, government-sponsored enterprise. Freddie Mac was created in 1970 to expand the secondary market for mortgages in the U.S. Along with its sister organization Fannie Mae, Freddie Mac buys mortgages, pools them and sells them as mortgage-backed securities to private investors on the open market. Similar to Fannie Mae, this secondary mortgage market increases the supply of money available for mortgage lending and consequently increases the money available for new home purchases. In 2023, Freddie Mac had $3.208 trillion in assets under its management.

Like its sister organization, and for the same reasons, Freddie Mac is in conservatorship. Although Diana Reid is the CEO of the organization, Freddie Mac is effectively overseen by the FHFA.

Since Fannie Mae and Freddie Mac, despite their conservatorships, control more than $7 trillion in assets, the resulting impact on the housing market and the general economy cannot be overstated. It is easy to see their impact the financial service sector.

Part III of this series will discuss the monitoring, oversight and impact upon the commercial finance sector of the Social Security Administration, Medicare and the Department of Insurance. •

Kenneth C. Greene is an attorney at his SoCal firm, the Law Office of Kenneth Charles Greene.

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