I do think Wallison too easily dismisses other drivers of the crisis, such as easy monetary policy, but his general points are well proven. Those points are: 1) there were a lot more toxic loans in the system than generally believed; 2) government entities (FHA, GSEs) held far greater amounts of those toxic loans than generally believed; and 3) Fannie/Freddie purchased much of those toxic loans due to their housing goals, not as a drive for greater market share
The above especially 3 has been the REP story against F and F from day one
It is not good news
It was the REP minority report of 4 REPS
3 of the 4 left that idea and put the blame mostly on TBTFB and Wall Street
It is dangerous to us and to the nation that such a close in person sadi #3. All of the people who spoke on the record for the GSA to the committe noted - F anf F purchased the toxic loans as follows
A. They were not done in any way by F and F. F and F did NOT buy the mortgages and package them
B. The crap paper was bought by F and F from TBTFBanks who had PLMBS
C. Thus a good chunk of say an 700-800B cushion of assets held by F and F where bought from the BANKS so F and F could get big interest and stay competitive without having to write more than a tiny part of this crap
D. This PLMBS paper is what vaporized in the crisis casused by the banks and WS
E. That put the Retained Earnings (Captial) of the GSEs in jeopardy
That truth as written over and over again in the last two years here and there and everywhere ------- and waswitnessed by the TBTF banks losing EVERY case about the paper (not mortgages but PLMBS securities)
So why anyone puts F and F anywhere in a three part explanation I do not understand as they were not in the top three
And then to do so saying F and F got into trouble following housing goals is bullkrip. First Dems gave some quotas and then Bush with an OWNERSHIP society wanted each year for 8 years to show how a > % of the nation owned. So there was a push in that direction DEM and REP but it still was a tiny part of the crisis
derivatives
shadow markets
frozen overnight bank to bank markets due to greed
and the role of PLMBS not on top not then in secon and third as in
PLMBS
PLMBS
PLMBS
is putting blame on the GSEs that is wrong wrong and wrong (hell half the posts here show its wrong)
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