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[Manos: The Hans of Fate]

The drive towards greater regulation of the financial industry is incredibly real and incredibly necessary.

Regulations such as ????

 

[Xyrmellon]

Here's more on that:



http://mediamatters.org/research/201107200034

Sorry, but you can't post a quote or link from Media Matters and expect it to be taken seriously. That site is radically partisan. It's just like if I posted from Foxnews or Brietbart, I would be laughed out of here. So am I saying I don't believe them? Yeah, that's what I'm saying...I am much more inclined to believe the New York Times version.

 

[Karma Kramer]

Regulations such as ????

http://www.cepr.net/documents/publications/dereg-timeline-2009-07.pdf

 

[Frank the Great]

at the very least student debt needs to be discharge-able in bankruptcy. absolute disgrace that it isn't.

 

[Karma Kramer]

Sorry, but you can't post a quote or link from Media Matters and expect it to be taken seriously. That site is radically partisan. It's just like if I posted from Foxnews or Brietbart, I would be laughed out of here. So am I saying I don't believe them? Yeah, that's what I'm saying...I am much more inclined to believe the New York Times version.

Not inclined to agree with Paul Krugman?

Krugman: "The Supposedly High-Risk Loans That [Fannie And Freddie] Were Making Or Buying Were, Demonstrably, Not Actually High-Risk." In a blog post, Nobel Prize winning economist Paul Krugman praised Min's report as "a terrific takedown of the claim that Fannie and Freddie caused the housing bubble." Krugman also wrote: "Every time you hear or read someone claiming that Fannie and Freddie were responsible for large amounts of subprime/risky lending, you should remember that this is based on essentially phony numbers: people at AEI invented their own definition of subprime, which isn't the standard definition, and, more important, doesn't work: the supposedly high-risk loans that F&F were making or buying were, demonstrably, not actually high-risk[.]"

 

[ToxicAdam]

Sorry, but you can't post a quote or link from Media Matters and expect it to be taken seriously. That site is radically partisan. It's just like if I posted from Foxnews or Brietbart, I would be laughed out of here. So am I saying I don't believe them? Yeah, that's what I'm saying...I am much more inclined to believe the New York Times version.

It's not really the site that matters, it's the person providing the analysis. 'David Min, the Associate Director for Financial Markets Policy at the Center for American Progress'. Which is essentially the Heritage.org arm of the left.


That doesn't mean his analysis is flawed, as he is partially right that F&F are not solely to blame. But they definitely share a big part of the blame. The government also does for allowing them to be a publicly-held company and face the pressures of performing for stockholders.

 

[Hasphat'sAnts]

This is like saying the root cause of the forest fire was a match, so we should make it harder to buy matches

What a terrible analogy.

Guess what? Even if all the "Wall Street crooks" weren't working in Wall Street, and the SEC, the Treasury, the Fed were run by your lovely people who were in no way affiliated with Wall Street. Bear, Lehman, AIG would still have happened because these mortgages were toxic assets.

 

[dave is ok]

What a terrible analogy.

Guess what? Even if all the "Wall Street crooks" weren't working in Wall Street, and the SEC, the Treasury, the Fed were run by your lovely people who were in no way affiliated with Wall Street. Bear, Lehman, AIG would still have happened because these mortgages were toxic assets.

You're wrong. The mortgages by themselves weren't the problem. It was the fact that they were packed together, securitized, rated AAA and sold as sound investments to municipal pension accounts and other "safe" investments

 

[ToxicAdam]

You're wrong. The mortgages by themselves weren't the problem. It was the fact that they were packed together, securitized, rated AAA and sold.

What helped them be rated AAA? What would give a ratings group the confidence to attach a AAA rating to them?

 

[Xyrmellon]

Not inclined to agree with Paul Krugman?

Nope.

 

[Evlar]

The (bad) mortgages were unquestionably bad. Really horribly poisonously bad.

The question here is: Why did the professionals who are paid to responsibly manage other people's money agree to create these terrible things? And why did other professional money managers downstream buy and hold them?

 

[Karma Kramer]

Nope.

He writes for the NYTs

 

[Manos: The Hans of Fate]

http://www.cepr.net/documents/publications/dereg-timeline-2009-07.pdf

Ones proposed by the OWS people, not by a think tank.

 

[JzeroT1437]

I personally can't believe this many people are opposed to the idea of regearing a country's financial system and government towards helping out the majority of people as opposed to a select few.

People are very tunnel-visioned here.

 

[Karma Kramer]

Ones proposed by the OWS people, not by a think tank.

what?

 

[Vicetrailia]

Yeah, regulation is definitely need to combat the mob mentality...it moves for better or for worse, it doesn't think, it just doesn't want to get left behind.

 

[dave is ok]

What helped them be rated AAA? What would give a ratings group the confidence to attach a AAA rating to them?

The shitty mortgages were packaged with not-so-shitty ones. They divided them into what was called 'tranches' and the people who always paid their mortgage on time with a 790 credit score were the top tranche, the dude who put no money down on his 300k mortgage and was given the mortgage by a scummy bank who told him his ARM would stay at 2% was in the lowest tranche.

The investments were fraudulently rated based only on the top tranche. The money that was guaranteed to come in every month.

I assume you already knew this but I'm not quite sure what your point is or how this vindicates the bank and puts the blame on the homeowner

 

[Hasphat'sAnts]

You're wrong. The mortgages by themselves weren't the problem. It was the fact that they were packed together, securitized, rated AAA and sold as sound investments to municipal pension accounts and other "safe" investments

If it weren't for the delusion that housing prices would rise forever, if it weren't for the toxic mortgages that fed into these CDOs, these securities would have been AAA.

The first asset backed security was issued in 1984 by the guys at BofA and Salomon Brothers. It's worked for more than 2 decades. Now ask yourself, why did it stop working now?

 

[dave is ok]

If it weren't for the delusion that housing prices would rise forever, if it weren't for the toxic mortgages that fed into these CDOs, these securities would have been AAA.

The first asset backed security was issued in 1984 by the guys at BofA and Salomon Brothers. It's worked for more than 2 decades. Now ask yourself, why did it stop working now?

To act like these types of CDOs were being issued at a high volume for two decades is being dishonest.

CDO issuance grew from an estimated $20 billion in Q1 2004 to over $180 billion by Q1 2007

 

[Manos: The Hans of Fate]

what?

What are the regulations and proposal's being suggested by OWS protesters?

 

[Xyrmellon]

He writes for the NYTs

Op-eds.

 

[Karma Kramer]

What are the regulations and proposal's being suggested by OWS protesters?

I was responding to your question...

The drive towards greater regulation of the financial industry is incredibly real and incredibly necessary.

Regulations such as ????

you want me to find OWS protestors who go over financial deregulation of the last 30 years... to prove what point exactly?

 

[Karma Kramer]

Op-eds.

He won a Nobel Prize?

Care to provide me with your credible sources on the 2008 market crash?

 

[Hasphat'sAnts]

To act like these types of CDOs were being issued at a high volume for two decades is being dishonest.

CDO issuance grew from an estimated $20 billion in Q1 2004 to over $180 billion by Q1 2007

1.) CDOs aren't the only types of asset backed securities. The SPV, the risks, and the language behind the contracts are different.

2.) You've actually supported my claim in that the bulk of this growth from early parts of the decade up to the collapse was propped up by sub-prime mortgages. Mortgages that had no business being created in the first place.

 

[Evlar]

If it weren't for the delusion that housing prices would rise forever, if it weren't for the toxic mortgages that fed into these CDOs, these securities would have been AAA.

The first asset backed security was issued in 1984 by the guys at BofA and Salomon Brothers. It's worked for more than 2 decades. Now ask yourself, why did it stop working now?

Very very bad incentives combined with the opaque-to-fundamentals nature of the CDO elevated it as a vehicle for endemic fraud.

 

[Manos: The Hans of Fate]

http://gothamist.com/2011/10/13/protesters_refuse_to_leave_zuccotti.php


After Mayor Bloomberg briefly visited the Occupy Wall Street encampment in Zuccotti Park last night, his office released a statement formally ordering the protesters to cooperate with sanitation workers who will be dispatched to clean the park on Friday. "The cleaning will be done in stages," the announcement reads, "and the protesters will be able to return to the areas that have been cleaned, provided they abide by the rules that Brookfield has established for the park." But the demonstrators, who have been occupying the park for almost four weeks, aren't buying it. Instead, they're going to clean the park themselves.

Their declaration reads:
On Wednesday/Thursday, all campers/supporters should reach out to friends/family/anyone to donate or purchase brooms, mops, squeegees, dust pans, garbage bags, power washers and any other cleaning supplies to be collected at sanitation. The sanitation committee should move full-speed ahead on purchase of bins allocated by consensus at GA.
After General Assembly on Thursday, we'll have a full-camp cleanup session. Sanitation can coordinate, and anyone who is available will help with the massive community effort! Then, Friday morning, we'll awake and position ourselves with our brooms and mops in a human chain around the park, linked at the arms. If NYPD attempts to enter, we'll peacefully/non-violently stand our ground and those who are willing will get arrested.
Afterwards, we'll march with brooms and mops to Wall Street to do a massive #wallstcleanup march, where the real mess is!

It seems unlikely the city will go along with this compromise. Brookfield Properties, which owns the park, recently sent a letter to the NYPD explaining, "Brookfield protocol and practice is to clean the park on a daily basis, power-washing it each weeknight, and to perform necessary inspection, maintenance, and repairs on a regular, as-needed basis. Since the occupation began, we have not been able to perform basic cleaning and maintenance activity, let alone perform more basic repairs. For example, if the lenses to the underground lighting have become cracked, water could infiltrate the electrical system, putting occupants of the Park at risk of an electrical hazard or causing short-circuiting which result in repairs requiring the Park to be be torn apart for rewiring."

The letter goes on to add that any such repairs would require the park to be closed for "indeterminate periods of time." Brookfield wants the NYPD to facilitate clearing the park for cleaning, and, tellingly, to "assist Brookfield in an ongoing basis to ensure the safety of all those using and enjoying the Park." This could mean that when the demonstrators are allowed back in the park after the cleaning, the NYPD could start enforcing the park rules which Brookfield disseminated among protesters two weeks ago.

These rules explicitly prohibit tarps, sleeping bags, storage of personal property on the ground, lying down on the ground, and lying down on benches. It's conceivable that the NYPD could prohibit protesters from returning to the park with such items, which are necessary to sustain any long term encampment. It's unclear if this is the unstated intention behind this official cleaning, but naturally the protesters have little trust in the NYPD and city government, and they're bracing for a confrontation.

 

[Manos: The Hans of Fate]

I was responding to your question...



you want me to find OWS protestors who go over financial deregulation of the last 30 years... to prove what point exactly?

I said I want to hear their proposals. You seem to be implying that they don't know what they are protesting about.

 

[empty vessel]

Yeah and the nature of scholarships is that very few students get them.

Look the point that a lot of people are carrying dumb debt is perfectly valid. Buying stupid shit on credit cards is no one's fault but the buyers (though I would point out that society encourages this kind of crazy behavior as the economy has grown dependent on this insane behaviour. Remember Bush's exhortation to the American people wasn't "We must sacrifice" but "Keep Shopping!").

That does not detract *at all* from the fact though that for most people getting a decent education is absurdly expensive, that any sort of a medical emergency can destroy a families finances even if they have insurance and are careful with their budget etc.

Not to mention that credit was offered specifically to take up the slack of the decline in living standard resulting from the shift of income distribution away from the bottom and middle class and towards the top 1%. In other words, the system made credit freely available (where it wasn't before) with one hand specifically to cover the heist it was pulling off with the other. It seems kind of odd to blame debtors for a systemic failure organized by Wall Street.

Middle Class Person A wouldn't need to buy "dumb shit" with credit if his share of national income had remained the same as it was in the 1960s, i.e., if his standard of living had continued to increase. Had his standard of living not stalled, he would have had income to buy that dumb shit. Instead, the income representing that man's increasing standard of living over the last three decades was appropriated for itself by the top 1%.

That people bought houses they couldn't afford was their fault (though it was encouraged by financial advisors that people rely on).

That the economy was running on billions and billions of dollars of bad debt that were packaged up in such a way that they could be rated 'safe' and that rating was used to then spread the bad debt around to infect almost everything was completely the fault of the Banks and other financial institutions.

There's a connection between those two. It was not that people were simply encouraged by financial advisers to buy houses they could not afford, subprime loans were aggressively pushed on people precisely because of what Wall Street was doing. Those who were giving out subprime mortgages knew they could turn around and sell them into the organized criminal enterprise Wall Street had developed.

 

[ToxicAdam]

I assume you already knew this but I'm not quite sure what your point is or how this vindicates the bank and puts the blame on the homeowner

Before I spend pages dancing around this topic, I just want to know if you feel that F&F played little or no part in the housing bubble and resulting financial crisis that insued?

Because that's my position, they deserve blame as much as the big banks do, as much as the credit rating agencies, as much as the smaller banks who gave the loans to the developers to build up inventories.

 

[Crazylegs]

You're wrong. The mortgages by themselves weren't the problem. It was the fact that they were packed together, securitized, rated AAA and sold as sound investments to municipal pension accounts and other "safe" investments

Packaging bad mortgages and selling them as safe investments was wrong, for sure. But the root issue is that many of the mortgages, indeed, were toxic assets. And here is the crux of the regulatory problem.

The brokers who wrote these mortgages did not have to underwrite them. They simply needed to write mortgages and make them look like reasonable risks on paper for the underwriters who were buying up the mortgages.

So you have brokers taking ridiculous risks in issuing mortgages for people that cannot really afford them. That drives the housing market to heat up because you have lots of people suddenly able to get home financing. The housing market responds with higher prices and more new home construction. Eventually, someone has to pay their bills and everything collapses.

This is fundamentally wrong - you should not be able to write a mortgage risk-free, because *that* drives dangerous behaviour - i.e. it's like gambling with someone else's money. From a regulatory perspective, you should have to assume the risk when you write the mortgage. This helps ensure you don't write bad mortgages in the first place. Many countries (e.g. Canada) have that kind of regulatory framework already, but the U.S. does not.

 

[dave is ok]

The ARMS were heavily sold in the late 90s and early 2000s. You literally can not have bad backed mortgage securities without bad mortgages to begin with! The securities industry got greedy after they saw how much money the banks were making. (I'm an investment advisor, FYI).

Not really.

Once the ball got rolling they were sold to feed the booming securities market

 

[Karma Kramer]

I said I want to hear their proposals. You seem to be implying that they don't know what they are protesting about.

No, you seem more interested in debunking this movement then contributing or educating yourself.

The drive towards greater regulation of the financial industry is incredibly real and incredibly necessary.

Regulations such as ????

Ones proposed by the OWS people, not by a think tank.

You aren't interested in facts or real issues, but whether or not these facts have been clearly conveyed to the masses through media which can be and often is opposed to regulation/corporate taxation.

Overall though, I feel like you keep repeating yourself throughout this thread. Its becoming quite nauseating.

 

[richiek]

http://gothamist.com/2011/10/13/prot...e_zuccotti.php


After Mayor Bloomberg briefly visited the Occupy Wall Street encampment in Zuccotti Park last night, his office released a statement formally ordering the protesters to cooperate with sanitation workers who will be dispatched to clean the park on Friday. "The cleaning will be done in stages," the announcement reads, "and the protesters will be able to return to the areas that have been cleaned, provided they abide by the rules that Brookfield has established for the park." But the demonstrators, who have been occupying the park for almost four weeks, aren't buying it. Instead, they're going to clean the park themselves.

Their declaration reads:
On Wednesday/Thursday, all campers/supporters should reach out to friends/family/anyone to donate or purchase brooms, mops, squeegees, dust pans, garbage bags, power washers and any other cleaning supplies to be collected at sanitation. The sanitation committee should move full-speed ahead on purchase of bins allocated by consensus at GA.
After General Assembly on Thursday, we'll have a full-camp cleanup session. Sanitation can coordinate, and anyone who is available will help with the massive community effort! Then, Friday morning, we'll awake and position ourselves with our brooms and mops in a human chain around the park, linked at the arms. If NYPD attempts to enter, we'll peacefully/non-violently stand our ground and those who are willing will get arrested.
Afterwards, we'll march with brooms and mops to Wall Street to do a massive #wallstcleanup march, where the real mess is!

It seems unlikely the city will go along with this compromise. Brookfield Properties, which owns the park, recently sent a letter to the NYPD explaining, "Brookfield protocol and practice is to clean the park on a daily basis, power-washing it each weeknight, and to perform necessary inspection, maintenance, and repairs on a regular, as-needed basis. Since the occupation began, we have not been able to perform basic cleaning and maintenance activity, let alone perform more basic repairs. For example, if the lenses to the underground lighting have become cracked, water could infiltrate the electrical system, putting occupants of the Park at risk of an electrical hazard or causing short-circuiting which result in repairs requiring the Park to be be torn apart for rewiring."

The letter goes on to add that any such repairs would require the park to be closed for "indeterminate periods of time." Brookfield wants the NYPD to facilitate clearing the park for cleaning, and, tellingly, to "assist Brookfield in an ongoing basis to ensure the safety of all those using and enjoying the Park." This could mean that when the demonstrators are allowed back in the park after the cleaning, the NYPD could start enforcing the park rules which Brookfield disseminated among protesters two weeks ago.

These rules explicitly prohibit tarps, sleeping bags, storage of personal property on the ground, lying down on the ground, and lying down on benches. It's conceivable that the NYPD could prohibit protesters from returning to the park with such items, which are necessary to sustain any long term encampment. It's unclear if this is the unstated intention behind this official cleaning, but naturally the protesters have little trust in the NYPD and city government, and they're bracing for a confrontation.

Fixed. See, I can play the selective bold game, too.

 

[dave is ok]

Before I spend pages dancing around this topic, I just want to know if you feel that F&F played little or no part in the housing bubble and resulting financial crisis that insued?

Because that's my position, they deserve blame as much as the big banks do, as much as the credit rating agencies, as much as the smaller banks who gave the loans to the developers to build up inventories.

Oh, I think they deserve plenty of blame. All of the big player mortgage banks do.

I just think its become a Republican talking point to shift blame to Fannie and Freddie or Barney Frank and say they created the economic collapse, which just isn't true

 

[Macam]

Apparently I'm not as crazy as some people on here would like to believe...

That person completely misses the point. It's not about feeling entitled, wanting things handed to you on a silver platter, not working hard, or about blaming Wall Street for personal debt. Clearly, that person didn't major in political science (or bother to read the news, let alone follow it, but, hey, maybe they're okay with that).

The protests are largely about the preferential treatment given to financial interests (and the wealthiest Americans), even in light of the economic debacle that they helped bring about by recklessness, greed, and a good dose of lax oversight that can be attributed to both parties. The result of the recession has been to disproportionately balance the budgets on the backs of the young and working classes while the financial regulations put in place are, at best, mildly onerous and impose relatively fewer constraints.

Of course, it's also easier to assert that sort of nonsense when you're still in university. It's quite another when you've graduated and get to see your job prospects first hand (hope you were an engineering major!). Besides, a lot of people protesting out on the grass did many of those same things and they're finding out that their own prospects are fairly abysmal because of the financially induced economic crisis, while those that helped cause it have gone on largely as before.

But hey, if that person wants to throw themselves in with the top 1% of people, a number of whom did absolutely nothing written on that piece of paper, despite not having of their wealth, great. The pitchforks and torches are on the other side.

 

[Manos: The Hans of Fate]

No, you seem more interested in debunking this movement then contributing or educating yourself.





You aren't interested in facts or real issues, but whether or not these facts have been clearly conveyed to the masses through media which can be and often is opposed to regulation/corporate taxation.

Overall though, I feel like you keep repeating yourself throughout this thread. Its becoming quite nauseating.

So you have no actual evidence of substantive proposals and measures coming out of the OWS people then? Okay, I mean you had to admit it in a roundabout way, but I am happy you've finally admitted.

 

[sangreal]

ARM and Subprime aren't synonyms.

 

[RSTEIN]

It seems kind of odd to blame debtors for a systemic failure organized by Wall Street.

Wall Street organized to kill itself?

 

[Evlar]

Before I spend pages dancing around this topic, I just want to know if you feel that F&F played little or no part in the housing bubble and resulting financial crisis that insued?

Because that's my position, they deserve blame as much as the big banks do, as much as the credit rating agencies, as much as the smaller banks who gave the loans to the developers to build up inventories.

"As much" is a useless quantification. Precisely as much? If you're implying precision, by what measure? Their share of responsibility for dollars lost in the bust, or something else? If it is "share of dollars lost" how on earth is that measured? Do you have access to an alternate universe in which Fannie and Freddie followed different policies that show their impact?

This implication that we can assign blame with such clarity is misleading. All we can do is construct narratives backed by data and some model of how this corner of finance works; by their nature these narratives are fuzzy. The purpose of these narratives, if they have any useful purpose at all, isn't to assign blame on a global scale; it's to figure out what we need to do to prevent these things from happening again.

If you're going to claim changing a few policies at Fannie and Freddie will prevent this from happening again, I'll ask you how it will accomplish this.

 

[ronito]

Apparently I'm not as crazy as some people on here would like to believe...

What you talking about being in denial? Dude has two scholarships. I'm pretty sure if you went to wall street and said "How's about we give everyone two scholarships?!" they'd be cool with that.

I remember I saw one of these conservos wrote about "I get paid $800 a month and spend $375 in rent and use the rest to pay bills." I was like "Bitch, $375 wont even get you robbed in the Bay area."

Edit: Also: "I'll just work harder!"

 

[dave is ok]

ARM and Subprime aren't synonyms.

Subprime Mortgages are what led to the crisis. Many of them were ARMs. I know the difference, thanks.

 

[Vicetrailia]

Wall Street organized to kill itself?

Mob mentality. It moved forward without thinking for better or for worse for the purpose of making money and not getting left behind. So yes, it fucked itself, it didn't keep itself in check.

But I guess that's the government job.

 

[Xyrmellon]

He won a Nobel Prize?

Care to provide me with your credible sources on the 2008 market crash?

I already did...Foxnews and Andrew Breitbart!!!

 

[dave is ok]

Dave, not sure how or why you think the securities market was booming in 2004/2005? We were rebounding from a recession

If my using the term 'securities' is offending you somehow, replace it in your mind with 'mortgage backed securities'

The total amount of mortgage-backed securities issued almost tripled between 1996 and 2007, to $7.3 trillion. The securitized share of subprime mortgages (i.e., those passed to third-party investors via MBS) increased from 54% in 2001, to 75% in 2006. A sample of 735 CDO deals originated between 1999 and 2007 showed that subprime and other less-than-prime mortgages represented an increasing percentage of CDO assets, rising from 5% in 2000 to 36% in 2007

 

[Zabka]

Dave, not sure how or why you think the securities market was booming in 2004/2005? We were rebounding from a recession but the sentiment is still noted. Unless I'm confused, your original position is that banks are at fault for this crisis, correct? You know the securities industry and the banking industry are not one and the same, yeah?

Wasn't that the whole issue with Graham-Leach-Bliley Act? It removed the barriers between deposit banks and investment banks allowing the creation of conglomerates like Citigroup?

 

[jorma]

Wall Street organized to kill itself?

if Wall Street is dead, why we still got protestors?

 

[M3Freak]

Apparently I'm not as crazy as some people on here would like to believe...

The guy who wrote that and anyone who believes it to be true and applicable to their own situation are ignorant and gullible.

 

[RSTEIN]

if Wall Street is dead, why we still got protestors?

lol, true. Not dead, no. But definitely zombiefied.

Sometimes people go off the deep end, especially the whole "corporate elite/Wall St-engineered destruction of the economy." Just like 9/11 truthers.

If you're the head of Bear Stearns and you're making millions in compensation and own a boat load of stock, why the hell would you want that to end? You want to keep the gravy train going! During the financial crisis, the greatest amount of wealth destruction happened to the 1%.

 

[Karma Kramer]

You remove the political factors from the equation. This also includes involvement with the credit agencies. McCain has already discussed this topic in great detail. Also, here's a good article from my favorite site:

http://www.investopedia.com/article...e-freddie-mac-credit-crisis.asp#axzz1ag3vYIBJ

From your article:

Conclusion: The U.S. Congress is Largely to Blame
Members of the U.S. Congress were strong supporters of Fannie Mae and Freddie Mac. Despite warnings and red flags raised by some, they continued to allow the companies to increase in size and risk, and encouraged them to purchase an increasing number of lower credit quality loans. While it is probable that Wall Street would have introduced innovative mortgage products even in the absence of Fannie Mae and Freddie Mac, it might be concluded that Wall Street's expansion into "exotic" mortgages took place in part in order to compete and take market share from Fannie Mae and Freddie Mac. In other words, Wall Street was looking for a way to compete with the implicit guarantee given to Fannie Mae and Freddie Mac by the U.S. Congress.

Meanwhile, Fannie Mae and Freddie Mac's debt and credit guarantees grew so large that Congress should have recognized the systematic risks to the global financial system these firms posed, and the risks to U.S. taxpayers, who would eventually foot the bill for a government bailout.

Krugman:

Krugman: "The Supposedly High-Risk Loans That [Fannie And Freddie] Were Making Or Buying Were, Demonstrably, Not Actually High-Risk." In a blog post, Nobel Prize winning economist Paul Krugman praised Min's report as "a terrific takedown of the claim that Fannie and Freddie caused the housing bubble." Krugman also wrote: "Every time you hear or read someone claiming that Fannie and Freddie were responsible for large amounts of subprime/risky lending, you should remember that this is based on essentially phony numbers: people at AEI invented their own definition of subprime, which isn't the standard definition, and, more important, doesn't work: the supposedly high-risk loans that F&F were making or buying were, demonstrably, not actually high-risk[.]"

Look, I'm as liberal as a gay man is fruity but this lack of common sense if utterly ridiculous.

 

[Evlar]

You remove the political factors from the equation. This also includes involvement with the credit agencies. McCain has already discussed this topic in great detail. Also, here's a good article from my favorite site:

http://www.investopedia.com/article...e-freddie-mac-credit-crisis.asp#axzz1ag3vYIBJ

... That article says next to nothing about any factors linking Fannie and Freddie to the collapse of Bear Sterns, Lehman, AIG, Countrywide and ilk, Wachovia, WaMu, the near death experience of all the other major US investment banks, and the resulting contraction in liquidity. When I talk about the financial crisis, that's the larger story I'm talking about.