Well Sam, since you’re hell-bent on blaming the Democrats, let me point to Bill Black, “a professor of economics and law at the University of Missouri-Kansas City and an authority on the Savings and Loan debacle of the 1980s.”
Read more here…The GOP Blames the Victim. Capitalism sure is fragile if subprime borrowers can ruin it.
This article
seems to say pressure came from all over for f&f to guarantee risky mortgages
came from all over…not just congress.
Isn’t the largest contributing factor the credit default swaps that were made on top of all the mortgage-backed securities? Aren’t the credit default swaps the fundamental reason that the sub-prime crisis has been turned into a catastrophe?
Without this multi-trillion dollar “shadow market”, 5-6% of mortgages defaulting or in danger of defaulting would not have brought down so many Wall Street giants, and potentially the entire economy.
That’s my understanding based on everything I’ve heard so far, and is also mentioned in thelink Clu-Me-In gives above.
If this is the case, then saying that Freddie and Fannie are the single largest contributing factor to the crisis is laying the blame in the wrong place. I see this as an allergic reaction. Sub-prime mortgages are the ‘peanuts’, and the financial system with its credit default swaps is the ‘body’ that went into a near-deadly anaphylactic shock in response to a non-lethal external factor.
I guess I’m mildly bewildered on two relatively minor points here: how was it Barney Frank’s committee when the Republicans were in the majority, and why did it take 60% of the committee vote to get it out of the committee instead of a simple Republican majority?
Well. All along I thought you were the hall monitor.
Sorry, I meant “The committee Frank was a member of”. He’s the head of it now.
As for the 60 votes, I already explained that. The Republicans didn’t have a big enough majority to prevent a filibuster, and the straight party-line vote against from the Democrats in committee was a signal that they would vote as a bloc in opposition and perhaps even filibuster. That’s where the 60% comes from - the number required to stop a filibuster. As house leader, you’re not supposed to put a bill of yours on the floor unless you believe it will win. Republians just couldn’t get the support needed from enough Democrats to take the bill to the floor for a vote.
It did pass out of committee, however. Just as severely damaged goods.
The amount of Fannie Mae’s exposure in late 2007 to what it defines as “sub-prime” mortgages is not necessarily the same thing as the total amount of subprime mortgages bought by both Fannie and Freddie over the last few years. In other words, you are comparing apples and oranges
I linked to that document primarily to show you were incorrect to the extent you claim that Fannie and Freddie did not take part in the subprime mortgage market.
That document would not appear competent to show the total amount of subprime mortgages purchased by Fannie and Freddie in recent years for the following reasons:
It does NOT include loans purchased or guaranteed by Freddie Mac.
Its definition of “sub-prime” is not clear and is in any even different from the definition used by the source for the article you link.
It purports to show “exposure,” which is not necessarily the same thing as total loans purchased in recent years.
It was prepared by an entity with an interest in minimizing its appearance of exposure to sub-prime mortgages.