There's a new claim started by the Republicans that the entire subprime mortgage crisis was started by Democrats and their friends at Fannie Mae and Freddie Mac.
Trouble is, it's not true.
Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.
[snip]
The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.
Conservative critics claim that the Clinton administration pushed Fannie Mae and Freddie Mac to make home ownership more available to riskier borrowers with little concern for their ability to pay the mortgages.
"I don't remember a clarion call that said Fannie and Freddie are a disaster. Loaning to minorities and risky folks is a disaster," said Neil Cavuto of Fox News.
Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans.
I realize that researching the mission statements of Fannie and Freddie is difficult, requiring as it does a perusal of the "About" page on each entity's website; since our Republican fellow citizens obviously haven't done so, I can only assume they don't want to. They'd rather lie in hopes of scoring political points.
Posted by Linkmeister at October 11, 2008 01:53 PM | TrackBack