...And if Fannie and Freddie failed to meet these goals? Cuomo held out a stick: possible penalties of $10,000 for each day that the targets remained unmet.
...By 2008, some $1.6 trillion of toxic mortgages, or almost half of those that were written, were purchased or guaranteed by Fannie and Freddie.
Reckle$$ Endangerment - Morgenson and Rosner - pp116-117.......
“Fannie and Freddie were already buying 42 percent of their mortgage loans to benefit low- and moderate-income families, but under Cuomo’s new rules, that requirement would rise to 50 percent.”
You appear to believe that loans to low and moderate income buyers equates to subprime, which is hardly the case. In fact the Fed study reported by Randall Kroszner found that 60% of subprime lending went to middle and higher income neighborhoods. Kroszner was a member of Dubya’s Council of Economic Advisors.
“Our analysis of the loan data found that about 60 percent of higher-priced loan originations went to middle- or higher-income borrowers or neighborhoods. Such borrowers are not the populations targeted by the CRA. In addition, more than 20 percent of the higher-priced loans were extended to lower-income borrowers or borrowers in lower-income areas by independent nonbank institutions—that is, institutions not covered by the CRA.6”
http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm#fn6
“...By 2008, some $1.6 trillion of toxic mortgages, or almost half of those that were written, were purchased or guaranteed by Fannie and Freddie.”
For decades F&F had a virtual monopoly on the secondary mortgage market. They were created in the first place to provide a secondary mortgage market.
In 2000 the GSEs held 48% of mortgage loans outstanding. But around 2000 F&F ran into serious competition from private securitizers and by 2006 the GSE’s share of outstanding mortgages had fallen to 40%.
This information is included in Lazard Asset Management’s research paper on the rise and fall of the mortgage bubble, which notably failed to identify the GSEs or the CRA as the cause of all the trouble:
http://www.lazardnet.com/LAM/us/tpd/pdfs/Inv_Research_Mortgage_Crisis.pdf