[nazgulnarsil]

he's full of schmidt. the private sector responds to the shitty incentives the government provides. the private mortgage market had no incentive to act responsibly because the government backed fannie and freddie were buying responsible and irresponsible loans indiscriminately. if banks had actually been holding the loans themselves they wouldn't have made such crappy investments.

[trevelyan]

This is not true. Fannie Mae has outperformed the rest of the private sector in terms of loan performance (non-delinquencies). The organization also lost market share throughout the bubble to private sector lenders, not the other way around.

http://real-estate-and-urban.blogspot.com/2008/09/charles-ca...

[yummyfajitas]

Your link provides no data supporting the contents of your post. There is a graph which ends in 2003, from which the blogger draws the same conclusion as you (Fannie has better non-delinquency rate). The graph does not show delinquencies at all, so I'm not sure where he is drawing this conclusion from.

[camccann]

You seem to be making the assumption that the private sector isn't perfectly capable of manufacturing its own shitty incentives without the government's help.

People aren't rational and decision makers don't automatically have incentives that align with the organizations they control.

[nazgulnarsil]

i'm not going to get into a long discussion about this as I'm sick to death of it. read some history. the joint-stock corporation has the best record of anything in human history of providing a better standard of living through voluntary means.