Allan Streib wrote:
Actually it was government policy that caused the giving of mortgages to
a lot of people who previously would never have had a prayer of
qualifying for one. The banks would not have taken risks like that on
their own without Freddie/Fannie being willing to buy those mortgages.
I'd rather blame the mortgage problem on derivatives like credit default swaps,
whereby the mortgages are sliced, diced, and repackaged until nobody know what
they are buying, it's all just paper by then. Sure, Freddie/Fannie underwrote
some mortgages that should not have been made (under prompting from the likes of
Clinton and Bush), but the likely losses on those mortgages are relatively small
in percentage terms. There are CDS in circulation that really are worthless,
which can't be said about conforming mortgages.
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