The Federal National Mortgage Association (Fannie Mae) (NYSE:FNM), the second largest corporation in the United States in terms of assets, buys mortgages from banks and financial institutions and sells mortgage backed securities (MBS), a type of bond, to investors of all sizes. Fannie was structured to play a dominant role in the secondary mortgage market and ensure a steady and reliable supply of funds for U.S. homebuyers. In August 2008, the U.S. federal government's implicit backing of Fannie Mae became explicit when former Treasury Secretary Henry Paulson announced that Congress had approved a plan giving the Treasury the authority to bail out Fannie if its capital levels dipped too low. Investors, who feared that a significant infusion of capital from the U.S. government would dilute the value of their holdings, punished Fannie's stock, which fell by as much as 90% in 2008.[1]