Word Routes

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Blaming Fannie and Freddie

As news from the financial world gets bleaker and bleaker, two scapegoats have emerged in the ongoing credit crunch: Fannie Mae and Freddie Mac. Here's a sampling of headlines from the Wall Street Journal opinion page: "Fannie Mayhem," "Fannie and Freddie's Enablers," "Frantic Fannie," "Fannie Mae Ugly," "Freddie Krueger Mac." Someone unfamiliar with the American economic system might think that Fannie and Freddie are the new Bonnie and Clyde, shooting up banks with reckless abandon. How did the crisis in the banking sector get so personal?

Fannie Mae, as the Visual Thesaurus will tell you, is the common name for the Federal National Mortgage Association (FNMA), "a federally chartered corporation that purchases mortgages." Freddie Mac, meanwhile, is the Federal Home Loan Mortgage Corporation (FHLMC), "a corporation authorized by Congress to provide a secondary market for residential mortgages." Both Fannie and Freddie made the news when it was announced that there would be a federal takeover of the two institutions, in an effort to limit the damage from the subprime mortgage crisis.

Fannie Mae started out as a government agency back in 1938, as part of Franklin Delano Roosevelt's New Deal. Though it was officially known as the FNMA, it was almost immediately given its feminine nickname as a playful acronym. The July-Dec. 1938 issue of Architectural Forum explained that the agency had already been "nicknamed 'Fanny May' by Washington's bureau wags." Over the next few decades "Fanny May" or "Fannie Mae" became an increasingly common designation. A 1967 book on the Department of Housing and Urban Development explained that "Fannie Mae" was "the unofficial trademark name often seen in financial headlines." The book quoted a spokesman for the agency, who said that "nobody seems to know who coined the nickname, but everybody uses it."

When the FNMA became privatized in 1970, the "unofficial" trademark turned into an official one, and the association referred to itself as "Fannie Mae" from then on. (You can see the original filing with the U.S. Patent and Trademark Office here.) In the meantime, other acronymic friends of Fannie had sprung up: Ginnie Mae (Government National Mortgage Association) arrived on the scene in 1968, followed by Sallie Mae (Student Loan Marketing Association) and then Freddie Mac. Much later, in 1988, came the Federal Agricultural Mortgage Corporation, nicknamed Farmer Mac.

Fannie and Freddie have gotten the brunt of criticism lately, and the bestowal of their nicknames has certainly personalized a couple of stodgy quasi-governmental institutions. This personalization has turned out to be a double-edged sword, however. On the one hand, some have argued that the use of the "Fannie" and "Freddie" nicknames led people to trust the agencies more than they perhaps should have. Here's how one online commenter put it:

These nicknames have a psychological effect of making them seem down-to-earth and reasonable to the common person, when ... at the end of the day they are still part of the bloated federal bureaucracy, as power-hungry and as corruptible as any other part. Maybe if people started calling them by their official acronyms (in this case, FNMA instead of Fannie Mae) they would lose some of their Teflon?

On the other hand, the nicknaming of the agencies also allows for a more personal style of attack, as observers look to apportion the blame for the mortgage mess. Certainly the names have been a boon to writers of newspaper headlines, and not just on the Wall Street Journal opinion page. Political cartoonists have also had a field day, portraying Fannie and Freddie as everything from gamblers to hoboes to hapless boaters. They've even been transformed into dead dogs and Humpty Dumpty-style broken eggs.

What do you think? Has the anthropomorphism of Fannie and Freddie had any psychological impact, for better or worse, as the banking crisis has unfolded? Or does it only matter to headline writers and cartoonists?


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Ben Zimmer is executive editor of Vocabulary.com and the Visual Thesaurus. He is language columnist for The Wall Street Journal and former language columnist for The Boston Globe and The New York Times Magazine. He has worked as editor for American dictionaries at Oxford University Press and as a consultant to the Oxford English Dictionary. In addition to his regular "Word Routes" column here, he contributes to the group weblog Language Log. He is also the chair of the New Words Committee of the American Dialect Society. Click here to read more articles by Ben Zimmer.

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Comments from our users:

Wednesday September 17th 2008, 5:13 PM
Comment by: Jon D. (King of Prussia, PA)
I am of the school of thought that the anthropomorphism of these institutions do, indeed, have an impact on perception and perception management. It's an enviable brand position to be in, actually.

However, I don't think the impact correlates to the reasons why they needed to be bailed out. I think the mismanagement in the financial sector is so deeply woven into the fabric of the financial sector that Fannie and Freddy (and, for that matter, Bear Sterns & AIG) are simply the largest stakeholders in the US, and would cause the most structural harm to the system if they were to default on their holdings.

In addition, I do not think that the very nature of them having human-sounding names necessarily affects the sentiments for/against these institutions in the general public.

But, I do believe that their unusual names helped put them in a different class of institution. I for one always presumed that they were somewhat attached to the federal government -- either as wholly-owned, or at a minimum super-tightly regulated.

Now that they've been bailed out and consumed by the government (a decision made by unelected officials with no democratic process enacted that I'm aware of), it turns out my presumptions have now become reality.
Friday December 5th 2008, 7:21 AM
Comment by: El (Los Angeles, CA)
The names Fannie Mae and Freddy Mac always sounded like something created to benefit minorities. The names sounded distinctly southern to me. When minorities started to receive the blame for the housing market slump,
I thought that indeed this was the case. Now I learn that they are big government agencies with lots of power, with folksy names. Thanks for clearing up my assumptions.

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