“Fannie & Freddie guaranteed these loans didn’t they? “
Freddie and Fannie actually buy these loans from the originators (not guarantee them). And Freddie and Fanny sell bonds to Swiss and other dumb bankers (all of whom were seen whining in Washington earlier today) to raise money to buy these loans.
Call it what you will. Fannie and Freddie got left holding wothless paper in their portfolio until it buried them and this was all encouraged by Barney Franks, Chris Dodd and Obama himself. McCain tried to pass a bill in 2005 and the RATS all voted NO. Might have saved us from this present crisis too.