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Originally Posted by Snake Doctor
Ummm, go fuck yourself.
I know what Fannie and Freddie did, and NONE of their assets/mortgages/paper are what the Treasury will be buying with the new $700 billion credit card it just got.
Fannie and Freddie's paper is already guaranteed by the government, therefore it's value is intact and doesn't affect any banking institution's balance sheet in an adverse fashion.
So again, please explain to me (if you are able) how it's Fannie and Freddie that are somehow responsible for the current credit crisis when their loans aren't the ones that the banks can't unload.
You can google all you want, but unless you're willing to accept right wing blogs and such as legitimate sources, you can't find the connection.
The point of this thread was to point out that blaming Fannie and Freddie, and by extension the democrats, and by extension trying to exonerate McCain because he jumped onto a bill to impose stricter regulations on Fannie (a year after the bill was written) is nothing but right wing rhetoric and is not based in fact.
If you can point me to FACTS that support the assertion that Fannie and Freddie and government policies toward mortgages are what led to this crisis, rather than deregulation of the banking sector which led to creations such as collateralized debt obligations and credit default swaps, then I would be more than happy to read them.
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Here are just a few points...
Fannie Mae and Freddie Mac contributed to the housing bubble. By using loose standards for buying loans at the bottom of the market, credit supply in that part of the market increase, and thus housing demand in that part of the market increased, which increased prices in that part of the housing market. That, in turn, drove up prices in the middle and upper parts of the housing market as well.
Shareholders of Fannie and Freddie, two of the biggest companies in the world, lost shitloads of money.
By buying loans, Fannie and Freddie increased the value of loans and reduced availability for other buyers. This encouraged other buyers to find profitable assets elsewhere in the market. In many cases, that meant going for the ones that didn't conform to Fannie's and Freddie's standards.
The impending failure and subsequent federal rescue of Fannie and Freddie convinced many investors to pull their money out of related markets.
Etc.
Of course, the wondrous new financial products of the past ten years, made possible only by a lack of regulation, have also played a huge role. And the ratings agencies' failure to correctly assess the risk on such products played a significant role, too. As did interest rates, which were kept too low for too long.
As I said before, many factors played a role. But Fannie and Freddie most certainly did contribute to the mess we're in right now.