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There would not have been these loans if the government was not gauranteeing them.
The government guaranteed mortgages? That would come as news to, say, Countrywide's employees. The government failed in many ways, but they didn't guarantee anything.
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We have had problems with F&F from almost the beginning of their existance.
F&F only touched upon half the residential mortgages, and none of the commercial ones - and the commercial market blew up in almost perfect parallel to the residential market. They only held about 28% of the subprime loans in 2008. And the delinquency rate was lower. They sure as all out didn't help, but they weren't out front causing havoc.
Lenders, completely unrelated to F&F, made loans they knew were unsustainable in the long run. We know this. We have the emails from Countrywide and other officials. Credit rating companies issued unrealistic ratings for securities derived from said loans.
The government guaranteed mortgages? That would come as news to, say, Countrywide's employees. The government failed in many ways, but they didn't guarantee anything.
Really? Then why are the taxpayers paying them off?
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F&F only touched upon half the residential mortgages, and none of the commercial ones - and the commercial market blew up in almost perfect parallel to the residential market. They only held about 28% of the subprime loans in 2008. And the delinquency rate was lower. They sure as all out didn't help, but they weren't out front causing havoc.
Together, Fannie Mae and Freddie Mac, the two biggest U.S. mortgage finance companies, owned a record $6.9 billion of foreclosed homes on March 31, compared with $8.56 billion held by all 8,500 U.S. commercial banks and savings and loans ... for a total of $15.5 Billion currently held in U.S. foreclosed properties.
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Lenders, completely unrelated to F&F, made loans they knew were unsustainable in the long run. We know this. We have the emails from Countrywide and other officials. Credit rating companies issued unrealistic ratings for securities derived from said loans.
Really? Then why are the taxpayers paying them off?
Because TARP passed in fall 2008 - I assume you're not going to argue that the underwriters knew of TARP's eventual passing in the happy days of 2004-2006, when they gladly issued interest-only stated-income no-assets loans?
How can you say with a straight face that loans were "Guaranteed" when banks like Countrywide actually went out of business due to their bad loans? Where was their guarantee?
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They owned a lions share of the bad loans.
After the meltdown, yes, F&F were stuck with a shiatload of bad loans, thanks to the market being blown up. That's still not a "guarantee". They were (nearly) as mismanaged as the other lenders, no argument there. But they weren't a root cause.
Incidentally, are you going to address the commercial real estate bubble I brought up previously? Difficulty level: F&F doesn't go near commercial real estate.
The meme that the banks were somehow enticed or even forced into issuing loans they didn't really want to is pure CYA from those who'd really rather not face the truth: That the sacred market forces simply went completely irrational, that those put in charge of keeping the system running didn't know what the f.ck they were doing and that the idea of "securitizing" mortgage debt actually increased the risk of market failure.
There would not have been these loans if the government was not gauranteeing them. We have had problems with F&F from almost the beginning of their existance...
It also came out as the result of an era with serious problems. But, to get back to the causes... what role do you think allowing large financial institutions to lend with leveraging over 30:1 played in the debacle?
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Originally Posted by BentBow
Why would Krugman even suggest lying, to spur a bubble? Why? Why lie? Why the deception? This is the subject.
Better question would be... who paid you to post a story from almost 10-months ago? (may be you're doing it for free?).
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