The Center for American Progress reviews the SEC lawsuits against former executives at Fannie and Freddie to, once again, refute The Big Lie.
You can always tell when someone is promoting The Big Lie about the financial crisis, which assigns primary blame to Fannie and Freddie. The one defining characteristic, the primary marker that sets these people apart from honest commentators, is their adamant refusal to ever discuss GSE loan performance—rates of delinquencies, defaults or liquidation losses—on a comparative basis. The reasons are obvious. It’s hard to argue with the results. Invariably, GSE loan performance is exponentially superior.
Instead, they endlessly parrot the discredited "research" of a rightwing think tank, the American Enterprise Institute. The AEI's Edward Pinto, the Curveball of the rightwing, promotes the laughable notion that Americans held "27 million subprime and other risky mortgages," almost half the U.S. total. When, in August 2010, the FCIC debunked Pinto's research by examining delinquencies on a comparative basis, one of the FCIC commissioners, AEI mouthpiece Peter Wallison, illegally leaked the report to Pinto, in order to give him a chance to respond. But Pinto had no response. If you pull back the curtain and begin discussing actual loan performance, Pinto's sham is exposed. Later, David Min at the Center for American Progress, also reviewed loan performance and thereby demolished the credibility Pinto's work.
Yet Peter Wallison persists in promoting this same crackpot notion on the December 23, 20011 op-ed page of The Wall Street Journal:
Relying on the research of my colleague Edward Pinto at the American Enterprise Institute, I stated in my dissent from the majority report of the Financial Crisis Inquiry Commission that there were approximately 27 million subprime and other risky mortgages outstanding on June 30, 2008, and a lion's share was on Fannie and Freddie's books. That has now been largely confirmed by the SEC's data.Wallison's nemesis, Joe Nocera of The New York Times, pulled no punches. In his December 23, 20011 piece, "The Big Lie," he writes:
In Wallison’s article, he claimed that the charges brought by the Securities and Exchange Commission against six former Fannie and Freddie executives last week prove him right. This is another favorite tactic: He takes a victory lap whenever events cast Fannie and Freddie in a bad light. Rarely, however, has his intellectual dishonesty been on such vivid display. In fact, what the S.E.C.’s allegations show is that the Big Lie is, well, a lie.Bound by the space limitations of the Times, Nocera could not expand on that point in great detail. Fortunately, David Min has, once again, laid out the facts for all to see. In "Cause and Effect," he writes:
Indeed, the SEC’s allegations actually contradict the argument that Fannie and Freddie, which at the time were so-called government-sponsored entities before falling into federal conservatorship in August of 2008, created the subprime mortgage bubble. And the SEC charges certainly do not support the extreme and factually baseless argument that federal affordable housing goals caused the financial crisis....To get all the facts, read Min's entire piece. One thing is certain. Neither Wallison nor Pinto will ever discuss the specifics of Min's analyses. But watch out for Wallison to launch shameless ad hominem attacks.
Some conservatives, most prominently Peter Wallison and Edward Pinto of the American Enterprise Institute, have seized on these taxpayer losses in an attempt to push the tired and now thoroughly refuted argument that Fannie and Freddie—driven by federal affordable housing requirements—caused the housing and financial crises. As the SEC makes clear, this argument is bunk.