Don’t kid yourself that Fannie and Freddie were just innocently forced to do what they were made to do. Fannie Mae under James Johnson had regulations made just for them, the lobbying he did to grow the company was astounding. I wouldn’t be surprised if 90 percent of the blame for the housing debacle couldn’t laid at his feet.
Congress didn’t “force” them to loan money to losers, except in the sense that they lobbied Congress to “force” them.
You really need to read a book about this, it’s fascinating and eye opening how this all happened. Sort of a perfect storm of greed. “Reckless Endangerment” is a good one and there are others.
Merry Christmas to you and yours! W & BJ
Spot on, Auntie. D1 it has been a while since I’ve seen you, my FRiend.
Another book I would recommend to both of you is “All the Devils Are Here”. Neither Fannie or Freddie were ever “forced” to do subprime — they lobbied for the ability to include that crap in stuff they bought and lied to their oversight people about how much of it they actually owned, which is one of the things th SEC is going after them for; that and misrepresentations on an offering of securities, which is a big time violation of the ‘33 Act.
I am not certain how they “evil Fair Housing Act made Fanny & Freddie fund garbage loans” meme entered conservative thought, but it is simply not so. Primary lenders and the GSE’s, in addition to Wall Street; all of the greedy POS’s pushed Congress for the ability to fund crap mortgages, package them up, and sell them to others looking for bonds yielding 10% that were secured by mortgages... There were NO, ZERO, NULL, EMPTY SET of heroes in the run up to 2008, D1. The cast of villians filled a 300 page book.
Add in the willingness of the raters to give AAA ratings on anything if the price was right and a bunch of really smart guys that became experts at packaging garbage inside ever more esoteric CMO’s, mezzanines, synthetic securities, repurchases, and other instruments to get a AAA rating, and there you have it.