Private sector loans, not Fannie or Freddie, triggered crisis
WASHINGTON — As the economy worsens and Election Day approaches, a conservative campaign that blames the global financial crisis on a government push to make housing more affordable to lower-class Americans has taken off on talk radio and e-mail.
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.
Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006.
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Fannie and Freddie purchased large amounts of liar’s loans, because their controlling managers did so because – the liar’s loans’ higher short-term nominal yield maximized their near-term compensation – not because “the government” made them do so. (Ritholtz)
Deflecting blame and providing endless distraction has helped protect culpable parties throughout the entire housing bubble and financial crisis. Most of the media, and mainstream papers too, will refrain from directly blaming banks for anything. Nearer to the election, the more passe it becomes. The more blatantly deceitful still claim some authority forced loans to the undeserving. The more you repeat a lie, the more effective it becomes.
The Banksters want to bury the crimes, hide the fraud and blame the Government they largely control, the truth is collusion and capture by finance, where culpability is equal inside and outside the so-called Government. They are all corrupt, the news media they own will never properly place “blame”. This is a war, and it is important to remember the techniques used when people go to war. You’re a homeowner who couldn’t pay an unaffordable loan, the powers that be haven’t decided you’re a terrorist, but their indifference is just as violent.
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