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View Diary: Does Reckless Endangerment Promote The Big Lie? (15 comments)

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  •  If you read the passage carefully, it (3+ / 0-)
    Recommended by:
    MGross, valion, VClib

    does not say that they owned half of the subprime mortgages. It says that they had a huge exposure, which they did. The agencies were, by far, the biggest buyers of the senior classes of subprime asset-backed securities. The losses on these securities, while less than that of the underlying whole loans, still is greater than 50%. While the right may be exaggerating the relative role of FN and FH in the buying frenzy which precipitated the liquidity crisis, I wouldn't spend a whole lot of energy defending the agencies. They were indeed culprits in this mess. Worse, they funded themselves at artificially low rates thanks to an implicit guarantee by us, the taxpayers, while at the same time booking all of their profits exclusively for their shareholders (and highly paid executives). And the taxpayer ended up holding the bag when they blew up in the face of massive losses.

    No, these guys are not all that worth defending. The "big lie" is, IMO at least, better described as the "modest exaggeration".

    •  Everyone was a culprit in this mess. (1+ / 0-)
      Recommended by:
      Clem Yeobright

      However, the right wing meme is that Fannie and Freddie were solely responsible.  And that is a Big Lie in my book.

      "If you tell the truth, you'll eventually be found out." Mark Twain

      by Steven D on Thu Dec 29, 2011 at 02:34:48 PM PST

      [ Parent ]

      •  I haven't seen actually where they (2+ / 0-)
        Recommended by:
        valion, VClib

        say that the agencies were "solely" responsible. If they do, then that is not true. Lenders, borrowers, the ratings agencies, and the regulators were all responsible as well. I am angry with the agencies because while the other parties never claimed that they weren't motivated by greed, the agencies would spend millions lobbying Congress and the public on how important their role was in helping the little guy and why they needed continued subsidies, while at the same time they acted as greedily as anybody.

        •  Local governments made matters worse. (0+ / 0-)

          Since most housing taxes are calculated as a percentage of a comparable house's most recent sales price, local governments were a large contributor to the bubble. Even worse, these exponentially increasing assessments were used to justify larger appraised values. With unnaturally low interest rates, mortgage fraud, and exploding assessments, there was no avoiding a real estate bubble. When people saw prices softening (running out of Greater Fools), there was no alternative to a crash. Well, we will relearn this lesson after we have forgotten the crash of '06 and start this vicious cycle again.

          I voted with my feet. Good Bye and Good Luck America!!

          by shann on Thu Dec 29, 2011 at 08:03:30 PM PST

          [ Parent ]

    •  Case in point (0+ / 0-)
      Central to Wallison’s argument is that the government’s effort to encourage homeownership among low- and moderate-income Americans is what led to the crisis. Fannie and Freddie, which were required by law to meet certain “affordable housing mandates,” were the primary instruments of that government policy; their need to meet those mandates, says Wallison, is what caused them to dive so heavily into those “risky” mortgages. And because they were powerful forces in the housing market, their entry into subprime dragged along the rest of the mortgage industry.

      But the S.E.C. complaint makes almost no mention of affordable housing mandates. Instead, it charges that the executives were motivated to begin buying subprime mortgages — belatedly, contrary to the Big Lie — because they were trying to reclaim lost market share, and thus maximize their bonuses.

      Fannie and Freddy came to the party late.  Are they guiltless?  Of course not, but they didn't light the match to the fuse, and they didn't cause the crisis because Democrats wanted more poor people to own homes.  The distinction is an important one.

      "If you tell the truth, you'll eventually be found out." Mark Twain

      by Steven D on Thu Dec 29, 2011 at 02:38:26 PM PST

      [ Parent ]

      •  I just think when you call it the Big Lie (1+ / 0-)
        Recommended by:
        VClib

        you sound like you are defending the agencies. The Big Exaggeration is far more accurate. The Big Lie is something like climate denial, or like the Laffer curve, where something is claimed that is the exact opposite of reality.

        •  Doc (0+ / 0-)

          I have heard repeatedly from my wingnut relations that Fannie and Freddie were behind the whole collapse, and that the democrats were the ones that pushed them to make all those sub-prime loans.  I'm nit defending what these execs did, far from it but I know what the Republican base believes because I've heard it over and over and no amount of evidence I present to them to the contrary will convince them that Wall Street was responsible.  Indeed, I've heard that the government leaned on wall street to make sub-prime loans so Freddie and Fannie wouldn't be hanging out there all by themselves.

          "If you tell the truth, you'll eventually be found out." Mark Twain

          by Steven D on Thu Dec 29, 2011 at 03:01:12 PM PST

          [ Parent ]

          •  Look, wingnuts believe all sorts of idiocy. (1+ / 0-)
            Recommended by:
            VClib

            That's why they are wingnuts. But we adults can discuss the economic collapse honestly and forthrightly, and we all know (or should) that the agencies were indeed fucked up in their approach. And their responsibility as part of the crisis doesn't disappear just because the right tries to paint them as even worse than they were.

            P.S. You will never convince any fundie of anything. It's never been done.

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