Taking the word of institutions who literally have a vested interest in being able to spin the blame to someone else isn't really substantive proof of anything.

 

At the end of the day, Freddie and Fannie were their as the backstop to this whole s*** show. It is immaterial who the primary seller of the original mortgage was. They all knew at the end of the day, rich Uncle Sam was there to back them up if no one else would. The fact that the whole world knew the feds were backing this paper garbage is even admitted by the CBO. They aren't about to take the next logical step and assign blame for setting up a system like this.

 

Page 30 shows they guaranteed a majority of the mortgages out there, long before this crisis happened. You can also take a peak at the chart on Page 31 to show you that their guarantees were by far the largest share of the marketplace. They also averaged about a 40% share of all mortgage debt in this country, far larger than any other entity out there, even if you take "private banks" as a category all to themselves, instead of being a sum of singular entities like they are in reality.

 

http://www.cbo.gov/sites/default/files/cbo...nniefreddie.pdf

 

Report page 54 (pdf page 74)

 

Even at the peak of private-label issuance, Fannie Mae

and Freddie Mac were able to remain dominant in the

secondary market for conforming mortgages because of

their regulatory advantages and implicit federal guarantee.

Private-label issuers instead focused on markets where

the GSEs could participate only to a limited extent, such

as most of the subprime market.

Edited October 12, 201213 yr by StrangeSox

But you'll quote the CBO at me later in this post? okay...

 

 

 

If you want to make an argument against implicit government guarantees of T-B-T-F for the big banks, that's one thing. That is separate from blaming F&F for the inflated sub-prime and MBS markets, let alone all the CDS's that sunk AIG and others.

 

 

 

"All loans" and subprime loans are not the same thing. You are conflating categories. You'll also notice Fannie and Freddie's total share of the secondary market declining starting in 2002, which is when the bubble really started to inflate.

 

You'll also note that their total amounts of guarantees never went down. In fact it went up 40-50%, even though their market share went down something like 5 points, which means they were still doing big business, even though others thought the market was infinitely profitable, again showing that these companies were wide open for business, despite their statements about how they didn't know what they were doing.

I said nothing about this being either party's fault. I was basically implying it is both of their faults. Although you failed to infer that.

 

there was nothing to infer!

Edited October 12, 201213 yr by mr_genius

Report page 54 (pdf page 74)

 

Weren't you the one just saying that subprime wasn't the problem? You just showed me that freddie and fannie were doing the guarantees for the group you are saying was at fault.

What would be a reason to compromise if there are none now?

 

Emergencies - war, national tragedies, etc. We're in a s***ty spot, but not an emergency, and both sides think they have the best solution to get us out of it so they're going to stick to that.

You'll also note that their total amounts of guarantees never went down. In fact it went up 40-50%, even though their market share went down something like 5 points, which means they were still doing big business, even though others thought the market was infinitely profitable, again showing that these companies were wide open for business, despite their statements about how they didn't know what they were doing.

 

But the place where the bubble actually was, the subprime market, was not driven by F&F. They were neither the primary originators nor the major secondary market buyers. F&F were followers in the sub-prime market, not leaders.

This is nothing new and has been a part of the process from the beginning. Unless there's a reason to compromise, you stick to your demands. Politics 101.

That doesn't happen a whole lot in Washington.

Weren't you the one just saying that subprime wasn't the problem? You just showed me that freddie and fannie were doing the guarantees for the group you are saying was at fault.

 

I was saying that F&F weren't the problem with subprime mortgages. Where did you get the idea that I was saying subprimes (and all of the associated financial instruments) weren't the problem? Of course they were, but the leaders on that market were private institutions, not F&F.

 

edit: I think maybe I misread what you said here, but you misread the CBO quote. That quote explicitly says that private-label lenders were the primary players in the non-conforming market that GSE's can't participate in, such as most of sub-prime.

Edited October 12, 201213 yr by StrangeSox

Emergencies - war, national tragedies, etc. We're in a s***ty spot, but not an emergency, and both sides think they have the best solution to get us out of it so they're going to stick to that.

 

Millions of unemployed americans seems like a national emergency to me!

Millions of unemployed americans seems like a national emergency to me!

Those are just lazy folks who need to pull themselves up by their bootstraps. No need for the government to get involved with that.

Millions of unemployed americans seems like a national emergency to me!

 

At peak efficiency there are millions out of work. And we're paying those people to be unemployed anyway. It's not like people are dying in the streets.

That doesn't happen a whole lot in Washington.

 

It happens daily, just not to the benefit of 99% of Americans.

Millions of unemployed americans seems like a national emergency to me!

 

simply millions of little bumps in the road.

 

 

 

It happens daily, just not to the benefit of 99% of Americans.

 

haha good point. they are more than happy to make compromises that help their political donors/ lobbyists/bribe givers.

At peak efficiency there are millions out of work. And we're paying those people to be unemployed anyway. It's not like people are dying in the streets.

 

At full employment, yes, at any given time, millions are out of work. We are nowhere near peak employment, and we have millions of chronically unemployed people who have been suffering for years. At the very least, it's a tragic waste of human potential.

At full employment, yes, at any given time, millions are out of work. We are nowhere near peak employment, and we have millions of chronically unemployed people who have been suffering for years. At the very least, it's a tragic waste of human potential.

 

Cannot have full employment or inflation would would go beyond what the alarmists call hyper inflation. Unemployment, sadly, is a necessary evil of capitalism.

Cannot have full employment or inflation would would go beyond what the alarmists call hyper inflation. Unemployment, sadly, is a necessary evil of capitalism.

 

not enough bumps in the road and the car can't stop or even turn that well. it's like driving on slippery ice.

At full employment, yes, at any given time, millions are out of work. We are nowhere near peak employment, and we have millions of chronically unemployed people who have been suffering for years. At the very least, it's a tragic waste of human potential.

 

So let's put em' to work. 70% of Detroit should be torn down and returned to nature. Start there!

Cannot have full employment or inflation would would go beyond what the alarmists call hyper inflation. Unemployment, sadly, is a necessary evil of capitalism.

 

"Full" employment is defined as something like ~4% unemployment rates. There's always people looking for jobs, but not chronically and in large groups.

So let's put em' to work. 70% of Detroit should be torn down and returned to nature. Start there!

 

I am completely on-board with a massive jobs program structured around infrastructure that needs to be built and rebuilt anyway.

But the place where the bubble actually was, the subprime market, was not driven by F&F. They were neither the primary originators nor the major secondary market buyers. F&F were followers in the sub-prime market, not leaders.

 

And just like was expected, after the collapse happened, guess who bought all of the sub-prime mortgages, just like the market expected?

that is a criticism of TBTF, not F&F. Nor does it remove culpability from private-sector actors.

that is a criticism of TBTF, not F&F. Nor does it remove culpability from private-sector actors.

 

So if you set up a system that has a massive hole in it, the people who set up the system aren't at fault?

So if you set up a system that has a massive hole in it, the people who set up the system aren't at fault?

 

The people who actively exploit such a system for their own personal profit, and quite a handsome profit at that, are at fault. Investment banks and mortgage companies weren't actors without agency here.

that is a criticism of TBTF, not F&F. Nor does it remove culpability from private-sector actors.

 

And no one is doing that. Stop embellishing the arguments that have been made in this thread.