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Home Publications Blogs Beat the Press It Was the Bubble, not Subprime, That Sank Fannie and Freddie

It Was the Bubble, not Subprime, That Sank Fannie and Freddie

Wednesday, 16 March 2011 04:46
The NYT told readers that Fannie Mae and Freddie Mac collapsed due to their movement into the subprime and Alt-A market in 2005 to regain market share. While the move into lower quality mortgages worsened their situation, Fannie and Freddie would have suffered very large losses even if they had stuck to their traditional market. The collapse of the housing bubble led to record default rates on all mortgages. The majority of mortgages in default now are on prime loans.
Comments (2)Add Comment
written by izzatzo, March 16, 2011 6:38
Teabaggers Against Multicollinearity and Heteroskedasticity agree. For every cause there's only one effect.
Fannie & Freddie Collapsed Due to Corrupt Management
written by Paul, March 16, 2011 8:56
The execs at Fannie & Freddie routinely cooked the books by reporting fraudulent financial results for many years to pad their compensation.

Now the taxpayers are paying those execs' legal fees to keep them out of jail. Welcome to America!

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.