[anamax]

> I disagree... after all, these same banks (and there are only a handful at the end of the day) precipitated the crisis that led to these homes being so far underwater in the first place.

Actually, no. The housing crisis was US govt created.

Govt agencies sued and restricted other activities of banks that didn't make dumb loans. Govt agencies gave special treatement to banks that used mortage banked securities with govt-approved insurance as their "regulated assets".

And then we had Fannie and Freddie lying about the loans in those securities, which threw off everyone's risk analysis.

And we're still pissing tax money into propping up the housing market via Fannie and Freddie.

FWIW, McCain actually tried to get Fannie and Freddie under control in 2005-6 He got his teeth kicked in. (To be fair, Bush didn't back him up.)

And yes, Fannie and Freddie execs of the relevant time frame were a who's-who of dem party leadership. Some of them are now in the Obama administration while others had prominent roles in his campaign.

[lesterbuck]

>Actually, no. The housing crisis was US govt created.

I have read this so many times, and I keep looking for something that backs it up. Yes, the US government made mistakes in this, but "caused" it? Please. I worked briefly in the mortgage business, just at the the subprime crisis hit, and I held a license.

The operative word is "sub-prime". A sub-prime loan is one that does not meet the Fannie/Freddie requirements to be sold in the secondary market, and thus is not handled by Fannie/Freddie. Sub-prime loans were all that was available to many people with bad credit, and sub-prime was specifically not standardized (as "conforming" loans are). With all the various details and options and tricky features, each loan was unique and it was impossible for a borrower to take your loan offer down the street and compare it with a loan from another company. Thus, the simple fact that they were getting a loan meant that they shut up and took the crap you offered, with ridiculously high fees. At the time, for example, you could get a sub-prime loan closed in a couple of weeks, with great fees, or you could wait six or seven weeks for FHA to work their process (and that FHA clerk is not getting a bonus at the end of the year for the number of loans they process).

Fannie and Freddie went down because they bought the mortgage backed securities as investments, not because they wrote the original loans (or accepted them in the secondary market) themselves. It's actually pretty weird that they drank their own Kool-Aid about how great an investment MBSs were.

[anamax]

> Actually, no. The housing crisis was US govt created.

Noted conservative Krugman suggested creating a housing bubble after the dot-com bubble and applauded it during the early stages.

[rdouble]

Paul Krugman, the author of "The Conscience of a Liberal," is a noted conservative???

[anamax]

> Paul Krugman, the author of "The Conscience of a Liberal," is a noted conservative???

Sarcasm....

[earl]

Stop getting your lies from Fox news. You're completely and utterly wrong.

For starters, Fannie and Freddie had their share of the mortgage market plummet during the bubble years. The loans they've made performed much better than other syndicated bank loans. The risk analyses were improperly done by the ratings agencies, and their basis were not (or should not) have been primarily Fannie/Freddie data.

Also, do you have any evidence at all besides the ravings of Fox news personalities about the government suing to force issuance of bad loans?

Please, do learn something about the situation. A great place to start is the blogs Calculated Risk or Naked Capitalism.

[anamax]

> The risk analyses were improperly done by the ratings agencies, and their basis were not (or should not) have been primarily Fannie/Freddie data.

You mean the rating agencies that were granted a monopoly on ratings by the SEC.... That monopoly meant that their ratings were unquestioned.

> Stop getting your lies from Fox news. You're completely and utterly wrong.

I note that none of your points actually refute my claim.

Fannie and Freddie's market share isn't the whole story. In fact, the bigger story was regulatory treatment of mortgage backed securities, which is why I emphasized it.

> Also, do you have any evidence at all besides the ravings of Fox news personalities about the government suing to force issuance of bad loans?

You've never heard of CRA?

From Wikipedia.

"The new Gramm-Leach-Bliley Act's FDIC related provisions, along with the addition of sub-section § 2903(c) directly to Title 12, insured any bank holding institution wishing to be re-designated as a financial holding institution by the Board of Governors of the Federal Reserve System would also have to follow Community Reinvestment Act compliance guidelines before any merger or expansion could take effect.[61]"