Beck, Palin, O'Donnell, and the Tea Party Are the New Buchanans

F/F didn't purchase or guarantee the vast majority of the subprime loans; it was mostly private mortgage lenders who originated and sold them on the secondary market primarily to private hedge funds and investment banks.

"Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data."

http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html

"By 2006, the market had surpassed $600 billion and accounted for one-fifth of mortgage originations. Independent mortgage companies made 46 percent of these loans; banks and thrifts made 29 percent. Affiliates and subsidiaries of banks and thrifts made the remaining 25 percent. While subprime lending existed before the 1990s, the flagrant and widespread abuses in this market did not occur until the late 1990s. The originate-to-distribute model presented the opportunity for independent lending institutions and mortgage brokers to make substantial profits. In this model, originators sell, or “distribute,” loans to the secondary market and have less incentive to scrutinize the riskiness of these loans than if they keep them. Their income and fees are based on volume of loans sold, so their focus is on quantity. Before the subprime market fell, securities backed by these loans yielded high returns and were thus appealing to many investors... Comptroller of the Currency John Dugan reported that [Nondepository mortgage lenders and brokers] “originated the overwhelming preponderance of toxic subprime mortgages” and these loans “account for a disproportionate percentage of defaults and foreclosures nationwide..."

http://www.dallasfed.org/ca/bcp/2009/bcp0901.cfm

F/F didn't cause the crisis. Reforming F/F would not have averted it. F/F doesn't make loans to borrowers; they purchase mortgages from commercial banks and guarantee them so as to give banks an incentive to loan to first time home buyers and those who meet certain credit standards but who would have a hard time getting credit in tough times. This has been its mission since its founding in the 1930s. Private sector lenders lowered standards to sell MBS derivatives. Bush's warnings on F/F were meaningless.

steve of IL 2:34PM September 23, 2010

Dishonest posters like you deserve to be called out on your flat out deception.

"The 2008 crisis was not caused by F/F and reigning them in would have done little. Bush also pushed expanding homeownership for minorities so blaming Clinton is disingenuous at best. """

How about the 17 times Bush warned Congress about reigning in FF? How about the 2005 bill republicans ended up dropping in committee given a guaranteed filibuster by democrats (S. 190)?

I remember in 2003-2004 how democrats were pushing that Bush and republicans hated minorities (their vitriol has only become nastier) and this was done to help counter that.

Was it republicans or democrats who would stage protests at banks who didn't lower loan standards for the right demographics?

Barney Frank as recently as February 2008 was praising F/F saying it was a wise investment. This from the same democratic congress that had weeks to lecture baseball players yet did nothing about the economy?

Bush made a lot of mistakes but your one sided dishonest story needs some serious fill in the blanks. Also a blog on the NYT isn't the most credible source. Glad to help you out.

Cryos of MN 6:46PM September 22, 2010

There was no housing bubble during Clinton. Prices began to appreciate in the late 1990s because interest rates began to tumble but 30 year mortgage rates averaged over 7%, not enough to create a bubble. The housing bubble came after the stock market decline in 2000.

Clinton's upturn went for ten years (1991-2001), the longest in US post WWII history. Was it supposed to go on indefinitely? According to yesterdays WSJ, the 2001 recession was the ONLY one since WWII that didn't experience an actual net output contraction, just a dramatic slowdown in growth. This is why the recession was so shallow and lasted so briefly. Bush still managed to make hash of a good economy. He really destroyed the it by all accounts.

The 2008 crisis was not caused by F/F and reigning them in would have done little. Bush also pushed expanding homeownership for minorities so blaming Clinton is disingenuous at best. Here's a telling excerpt from a speech Bush made in Phoenix about federal housing policy and expanding minority home ownership;

"I’m going to tell you another statistic, which is an amazing statistic given what we’ve been through. Housing starts in 2003 were the highest in a quarter of a century. Homeownership sales were the highest ever. Sixty-eight percent of homeownership — the homeownership rate is the highest ever. And that’s fantastic news for America. We want more people owning their own home. There’s nothing like saying, this home is my home. There’s nothing better than somebody over there saying, welcome to my home. And we’re about to talk to some first-time homeowners. And I want to share their stories with you — they’re going to share their stories with me, and you’re going to get to hear it. I do want to talk about a challenge for our country, and there is a minority homeownership gap in America. Not enough minorities own their own homes. And it seems like to me it makes sense to encourage all to own homes. And so we’ve done some interesting things. Again, I want to thank the Congress. But we passed down payment assistance programs that will help low-income folks buy their own home. A lot of times, if you’re trying to buy your own home, you never bought one, the down payment seems like a little much. Some of you know what I’m talking about. It seems to make sense if one of the things we’re trying to do is to get — to close the minority home ownership gap and to get 5.5 new — million new minority homeowners into homes over the next five years, that we ought to help with down payments — and we have...I proposed that mortgages that have F.H.A.-backed insurance pay no down payment. That will help 150,000 new homeowners."

http://norris.blogs.nytimes.com/2008/10/08/whos-to-blame/

It was really Clinton that got the national home ownership rate up to 68%. He did it during a time of prosperity and growing real middle class income. Bush's program relied on the "originate and distribute" model of lending. It was a financial disaster.

steve of IL 3:02PM September 22, 2010

How much of TARP that was paid back has barry spent ?

How much hidden tax has barry added to those making less than $200,000.

Accentually we are leaving Iraq victorious. Barry has expanded cost of Afghanistan much. With Democrats agreeing to WMD there here I give link to their quotes. Some Democrats have forgotten their quotes with no WMD found. Thank goodness for internet to remind us and them:

http://www.snopes.com/politics/war/wmdquotes.asp

Shall we go into early on recession Bush had. The fanny and Freddie mess Bush warned os and started warning year one of his administration. Had Congress heeded his advice we very well may not had major recession. Want to go into Clinton housing mess ? Bush debt is not Bush debt.

http://gatewaypundit.firstthings.com/2010/05/pelosi-caught-in-major-lie-says-bush-didnt-warn-congress-about-financial-crisis-records-show-he-warned-congress-17-in-2008-alone/

Lawyer obama and ACORN was involved in housing mess. Want to discuss ?

Please, stop blaming Bush. That and racism has outlived liberal usefulness and loss any meaning.

Just ask, have many links. Not just questions...

Bill Hedges of MO 10:03AM September 22, 2010