I really want to know. I keep reading and hearing all of these conservative pundits and mouthpieces saying the crisis was caused by Fannie and Freddie and because the liberals wanted poor people to own homes.
I can't, however, find any facts to back that up.
Fannie and Freddie were taken over by the government before the current credit crisis emerged. Any subprime mortgages that were backed by Fannie and Freddie are already guaranteed by the government, by virtue of them taking over Fannie and Freddie....so the paper/bonds/securities/mortgages from Fannie and Freddie have nothing to do with the current crisis.
The current "toxic securities" are a creation of the investment banking and insurance industries. "If" they had anything to do with Fannie and Freddie, they would be backed by the government and worth 100 cents on the dollar.
These mortgage backed securities were an instrument created by the banking industry, after they were deregulated, and these "non Fannie and Freddie" securities are what are choking off the credit market.
They are a direct result of deregulation and have nothing to do with the Community Reinvestment Act or the increased home ownership goals that both parties pushed for in congress. As a matter of fact, very few of the loans that are causing problems now were given by institutions that were subject to the provisions of the Community Reinvestment Act.
So will someone please explain to me how a bunch of bad mortgages given out between 2003-2007 are the fault of a law passed in 1977 or the push for home ownership by the Clinton administration from 1992-2000?
More info
http://www.businessweek.com/investin...ity_reinv.html