re: #741 Aceofwhat?

I don’t know about lawhawk, but obscuring the role of Fannie and Freddie here is like blaming a hospital for a fatal cobra bite. Yeah, the hospital probably should have had antivenom. Can we go back to the part where the dude was playing with a cobra?

For me, your post isn’t worth answering because it utterly fails to ascribe proper fault to the key players in the system.

I don’t have the stats regarding what percentage of the failed CDOs (and the subprime paper that composed them) passed through Fannie and Freddie’s hands, but I am under the impression that it was pretty low. Their underwriting standards were higher than (again, for example) Countrywide’s or New Century’s, and if they were involved, there wouldn’t have been any need for people like Merrill, Citi, Lehman, Bear and the rest to structure and underwrite the RBMS’s.

More simply put, Fannie and Freddie didn’t kill Merrill, Merrill did. Ditto the others I named. And the pain surrounding the takeover of those two isn’t what collapsed the credit markets. That happened when Lehman failed, and I haven’t seen any responsible financial commentator lay that failure at the feet of Fannie and Freddie. (I note that in my earlier comment, I wasn’t talking about Fannie and Freddie, I was talking about the oft-mentioned conservative theory that the Community Reinvestment Act was responsible for the housing bubble and credit crisis. But I wasn’t clear on that point. Sorry.)

I have no particular ax to grind regarding those two entities, and I certainly agree that their whole reason for being is worth reconsideration. But if they simply ceased to exist, we would still have the risks we have today, and we would have done nothing meaningful to address them. That is what bothers me.

Finally, feel free not to answer posts of mine that fall below your standards. I promise not to read your silence as assent.