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Author: 2828 Big funky green star, 20000 posts Top Recommended Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 744751  
Subject: Re: So What Happens If Obama Wins again?? Date: 9/4/2012 11:57 AM
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I keep proving you wrong, and you keep failing to understand that. Freddie and Fannie only held 24% of the subprime mortgages. They did not cause the collapse. Either you're not smart enough to understand that, or you're lying.

Which is it?
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There's a third option, you don't know what you're talking about:

http://www.openmarket.org/2011/12/16/fannie-mae-and-freddie-...

“One of the regular claims from Fannie Mae and Freddie Mac apologists . . . is that the two entities were blameless” for causing the mortgage meltdown and financial crisis, as these two “Government-sponsored enterprises” (GSEs) supposedly “weren’t involved in subprime” mortgages and were forbidden to buy them. This false and dishonest claim has now been refuted. In charging the former heads of Fannie and Freddie with fraud, “the Securities and Exchange Commission has decided that not only could the GSEs buy subprime, but they did in fact do so and, even worse, they lied about it.”

As Cato Institute economist Mark Calabria notes, “Back in 2008, Paul Krugman went so far as to say, ‘they didn’t do any subprime, because they can’t.’ Just taking 10 minutes to read the actual statute and regulations would have revealed to him that they actually could. Krugman went on to say, ‘Fannie and Freddie buy only mortgages issued to borrowers who made substantial down payments and carefully documented their income.’ Of course, just reading Fannie’s 10-K would have revealed that claim to be false. But why let facts get in the way?”
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After James A. Johnson, a Democratic political operative and former aide to Walter Mondale, became chairman of Fannie Mae in 1991 . . . it became a political powerhouse, intimidating and suborning Congress and tying itself closely to the Clinton administration’s support for the low-income lending program called “affordable housing.” This program required subprime and other risky lending, but it solidified Fannie’s support among Democrats and some Republicans in Congress, and enabled the agency to resist privatization or significant regulation until 2008. “Under Johnson,” write Ms. Morgenson and Mr. Rosner, “Fannie Mae led the way in encouraging loose lending practices among banks whose loans the company bought. . . . Johnson led both the private and public sectors down a path that led directly to the financial crisis of 2008.”. . .Far from being a marginal player, Fannie Mae was the source of the decline in mortgage underwriting standards that eventually brought down the financial system. It led rather than followed Wall Street into risky lending. . .Edward Pinto (a former chief credit officer of Fannie Mae) . . . presented . . . evidence . . . showing that by 2008 half of all mortgages in the U.S. (27 million loans) were subprime or otherwise risky, and that 12 million of these loans were on the books of the GSEs.
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Read the book Reckless Endangerment, it's an eye-opener.
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