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Fannie and Freddie don't originate mortgage loans. They're simply in the business of buying loans from banks. Fannie and Freddie actually had rather strict requirements about what type of loans could be included in their portfolios.
You can't write Bush out of the history of the financial crisis no matter how hard you try to shift blame over to Congress, Fannie, Clinton, etc. He actively promoted and incentivized zero down loans, which most reasonable people should have known would be a disaster, but everyone was cheering that on the same way they are cheering on today's stock market gains.
You're right, it was HUD, Barney Frank and Chris Dodd. And they didn't do anything about it.
Fannie and Freddie don't originate mortgage loans. They're simply in the business of buying loans from banks. Fannie and Freddie actually had rather strict requirements about what type of loans could be included in their portfolios.
You can't write Bush out of the history of the financial crisis no matter how hard you try to shift blame over to Congress, Fannie, Clinton, etc. He actively promoted and incentivized zero down loans, which most reasonable people should have known would be a disaster, but everyone was cheering that on the same way they are cheering on today's stock market gains.
It wasn't a housing crisis, it was a CREDIT crisis. Fractional reserve lending absolutely depends on the underlying assets. When they're suspect, the result is a CREDIT crisis.
Excellent point. And now with different Fed policy this is much less apt to happen again. Fractional reserve is now passe'.
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