1. Fanny and Freddie weren't govt agencies proper. There was an implicit guarantee, but the only govt agency that was a govt agency was Ginny Mae, and they did just fine. No problem there.
2. There was a colossal mountain of fraud in the creation and processing of mortgages: this involved lying to the clients, putting the clients into the most expensive mortgages possible, and even supplying fraudulent signatures. Nobody forced the banks to do that.
3. There was an additional colossal mountain of fraud in the securitization of the mortgages above: toxic instruments that were branded and peddled as AAA when the purveyors knew full well they were crap.
The govt's fault was lack of oversight, though the FBI yelled long and loud about it. And then of course the failure to nationalize or penalize when the gig was up.
Have I forgotten anything?
Joanna
----- Original Message ----- From: "Rick" <cr70814 at verizon.net> To: "LBO (Left Business Observer)" <lbo-talk at lbo-talk.org> Sent: Tuesday, October 18, 2011 5:53:22 PM Subject: [lbo-talk] "Fannie Mae and Freddie Mac are to blame!"
I was speaking with a liberal friend of mine the other day and she says she doesn't agree with the protesters who "blame the banks" for the housing component of the financial crisis". She says it's much more accurate to attribute primary responsibility to Fannie Mae and Freddie Mac. According to her, the FM's pushed the notion that everyone needs to be a homeowner into America's cultural/political discourse, and through various ideological, political and economic means encouraged people to buy homes they couldn't afford and encouraged banks to offer mortgages that on their own they wouldn't have offered. She sees both home buyers and banks as victims of Fannie and Freddie's policies.
My gut reaction is to just say "Are you kidding? I'm sure FM had a role but it's the banks' voracious need for profit that was the primary cause", but my views are not nuanced enough to have this conversation intelligently. Can folks give me further analytical and factual information that can help me respond to her? ___________________________________ http://mailman.lbo-talk.org/mailman/listinfo/lbo-talk