[lbo-talk] Goolsbee: subprime was pretty groovy (in 2007)

Jordan Hayes jmhayes at j-o-r-d-a-n.com
Mon Dec 1 07:41:22 PST 2008



> The original (narrower) one here was whether handing out
> mortgages like Mardi Gras beads was in itself a Good Thing
> as far as it went -- spreading the wealth etc.

It was overdone, to be sure. But I think my original point was applicable here: the modernization of credit risk modeling by folks like Freddie Mac and Fanny Mae has, for the last few decades, certainly been a Good Thing. The regulation and oversight they received was probably adequate (and can of course always be more); it's the *other* half of the mortgage market that was unregulated and thus ripe for the abuses that we're just now unwinding (and learning about). And that part had more to do with the other products than just mortgages and who "should" get them.

So I think it's a little bit of the baby and the bathwater, that original statement.

/jordan



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