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While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
Furthermore, isn't the financial reform bill a good thing that should be more or less universally supported? The major criticism I hear is that Fannie and Freddie were excluded. While I agree that this is a shortcoming, it seems to me that the bill will do good, protect consumers (people) and help lower the chance of a repeat performance of the greed that got us in to the financial mess in the first place...
If you think the bill is problematic and shouldn't have been passed, what would you propose congress should have done?
While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
Furthermore, isn't the financial reform bill a good thing that should be more or less universally supported? The major criticism I hear is that Fannie and Freddie were excluded. While I agree that this is a shortcoming, it seems to me that the bill will do good, protect consumers (people) and help lower the chance of a repeat performance of the greed that got us in to the financial mess in the first place...
If you think the bill is problematic and shouldn't have been passed, what would you propose congress should have done?
I think it's dishones and reductionistic to say any one cause is the cause. As you say Fannie and Freddie had a role, and I don't like that politics are keeping them out of the bill. It makes is pretty clear that politics are coming before addressing the problem completely.
While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
Furthermore, isn't the financial reform bill a good thing that should be more or less universally supported? The major criticism I hear is that Fannie and Freddie were excluded. While I agree that this is a shortcoming, it seems to me that the bill will do good, protect consumers (people) and help lower the chance of a repeat performance of the greed that got us in to the financial mess in the first place...
If you think the bill is problematic and shouldn't have been passed, what would you propose congress should have done?
Yes it's intellectually dishonest and reductionistic to the nth degree to say that Fannie and Freddie were the cause. Their potential omission from the Reform Bill, as an excuse not to support the bill, is just that - an excuse.
If Fannie and Freddie had been included they simply would have found another reason, "there was no Glass-Steagall", "it adds too much government control", "it will kill jobs"...
...all rationales that have recently been floated here on CD for why the bill shouldn't have passed. Their logic makes as much sense as saying, your car needs to have it's tires rotated, the oil changed, and the alternator replaced, but because you failed to rotate the tires you refuse to do anything at all.
While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
No. If you had read Pinto's article, you wouldn't be asking that question. Fannie and Freddie precipitated both the easy money lending (so lenders could meet CRA requirements), and the artificially distorted over-demand for housing which created the bubble. RealClearMarkets - How Did Paul Krugman Get It So Wrong?
How was all that money for the trillions of dollars of loans created? Fannie and Freddie securitized the trillions of dollars of mortgages they bought from the lenders, sold those securities to banks, investors, foreign governments, etc., those securities were hedged (it would be extremely foolish not to), and when the inevitable defaults (remember, the loans were made to those who were poor credit risks) started gathering steam, the whole thing came crashing down.
The details will provide a much clearer view on this
However anything that has Todd & Franks stamped to
it leads me to believe that people who can not afford
some things should not be extended the credit so that
the people who do pay their bill won't have to bail them
out again
And why do you think that Fanny & Freddie were not included
in this, one simple term...REGULATION ! and that equals
accountability
While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
Furthermore, isn't the financial reform bill a good thing that should be more or less universally supported? The major criticism I hear is that Fannie and Freddie were excluded. While I agree that this is a shortcoming, it seems to me that the bill will do good, protect consumers (people) and help lower the chance of a repeat performance of the greed that got us in to the financial mess in the first place...
If you think the bill is problematic and shouldn't have been passed, what would you propose congress should have done?
No one is saying there is just one cause. But they did have a huge role in this. Yet tell me how many times the media covered Fannie/Freddie and the liberal art of lending to those who cant pay? Tell me how many things were passed by this Administration to take that issue on? Tell me what theyve done to prevent it from happening again. They've done NOTHING.
In fact, Fannie/Freddie continue to move on unscathed from all of this. Unbelievable. They had a huge role in this mess, yet they get away with out a scratch. And look at the history and record. Corruption. The DC folk like Frank and Pelosi and Waters protect Fannie/Freddie.
And recent news articles, and not by any liberal paper, are reporting that the dumb lending practices that helped get us here have already begun again.
While undoubtedly Fannie and Freddie had a role in the financial crisis, isn't it both intellectually dishonest and reductionistic to suggest they were the CAUSE of the financial crisis?
Furthermore, isn't the financial reform bill a good thing that should be more or less universally supported? The major criticism I hear is that Fannie and Freddie were excluded. While I agree that this is a shortcoming, it seems to me that the bill will do good, protect consumers (people) and help lower the chance of a repeat performance of the greed that got us in to the financial mess in the first place...
If you think the bill is problematic and shouldn't have been passed, what would you propose congress should have done?
Oh... forgot to mention another important detail. Fannie and Freddie intentionally misrepresented the quality (risk level) of trillions of dollars worth of the mortgage-backed securities they were selling banks, investors, foreign governments, etc., classifying them as "prime" when they actually had the characteristics of sub-prime loans. Origins of an American Kleptocracy | zero hedge
Of course, the fallout from this outright fraud has the potential to be so severe, that Obama gave Fannie and Freddie an I'm-going-to-do-it-now-while-everyone's-distracted holiday present (December 2009)... a blank check, unlimited bailout whenever they need. After all, as GSEs the worldwide expectation is that the U.S. Government (which ultimately means the taxpayers) guarantees those trillions of dollars worth of loans. U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy - WSJ.com
I think it's dishones and reductionistic to say any one cause is the cause. As you say Fannie and Freddie had a role, and I don't like that politics are keeping them out of the bill. It makes is pretty clear that politics are coming before addressing the problem completely.
They have to be kept out of the bill.
They have massive financial problems.
The Fed is practically the market maker there since no one wants that toxic debt as investments.
Fannie/Freddie have to stay where the government can inject money to keep them afloat without having to jump through the hoops of the financial reform. They are too far gone at this point to regulate back into health.
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