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Home Publications Blogs Beat the Press NPR Tells Us That Republicans Believe that Fannie and Freddie Caused the Crash

NPR Tells Us That Republicans Believe that Fannie and Freddie Caused the Crash

Tuesday, 17 August 2010 04:16

Yes, NPR looked into the eyes and now they know what the Republican leaders believe:

"In the eyes of Republican lawmakers like Sen. Mitch McConnell, Rep. John Boehner and Sen. Lamar Alexander, Fannie and Freddie started the rush into risky home mortgages that ultimately shook the foundation of the whole economy."

In Journalism 101 reporters are told not to say things that they don't know to be true. And high on the list of things that reporters do not know is what politicians really believe.  

News flash! Politicians sometimes say things that they do not believe to be true. The Republican allegations about Fannie and Freddie would likely be on this list, since they are so obviously not true as one of the sources in this piece points out.

Fannie and Freddie were late to the rush into junk mortgages. Most of the junk mortgages were securitzed by private issuers of mortgage-backed securities, like Citigroup and Goldman Sachs. Fannie and Freddie got into this market in a big way in 2005 because they were losing market share.

It is likely that the Republican leadership knows these facts, or deliberately has opted not to know them, but blames Fannie and Freddie anyhow because they want to associate the downturn with liberal efforts to extend homeownership to low and moderate income people. This fits better with their political agenda rather than acknowledging that the main problem was greed and fraud perpetuated by major Wall Street banks (who were bailed out by taxpayers) and many lesser actors in the financial sector.

Responsible reporters would simply present the facts here. They would not try to tell us what the politicians really believe, since they really have no idea.  


Comments (11)Add Comment
written by izzatzo, August 17, 2010 5:39
Yes, NPR looked into the eyes and now they know what the Republican leaders believe:

As Teabaggers we reformed Republicans keep a portrait of Putin on the wall to remind us of how much he loves reporters and what the face of government evil really looks like, and how it can be recognized on sight by looking into its soul through the windows of its eyes as taught to us by Boy Monarch Bush. Since the bubble burst we added portraits of Fannie and Freddie, two commies from within.
written by scott, August 17, 2010 8:23
"In Journalism 101 reporters are told not to say things that they don't know to be true."

There is vast ignorance of "professional ethics" and duties among so many practitioners. The fiduciary duties are limited but they have long ago betrayed these.

The fiduciary duties offer a superior form of regulation to the rule (and loophole) intensive form of regulation Washington seems to favor. Fiduciary duties are venerable, tested and stand as a clear principle. Rules offer opportunities for greasing palms and the obligatory reach around that keeps our politicos well funded.
written by skeptonomist, August 17, 2010 8:26
If Fannie and Freddie were actual government agencies, as Fannie was originally, instead of private companies, there would have been no incentive for them to compete for market share in a bubble. Their proper role would have been to bolster the market in slack times and to provide mortgage money for lower-income people, things in which there is not much profit. Privatizing them clearly subverted their real purposes. The goal of returning them to the private sector should be abandoned.
written by skeptonomist, August 17, 2010 8:34
Actually political reporters probably have a good idea what politicians think, or at least what their real objectives are. They certainly are aware that politicians frequently don't tell the truth, and reporters are not doing their jobs if they just stenographically pass on what politicians say. That sort of thing could be replaced nowadays by the politicians' or parties' own web sites, thereby saving many trees and needless wear and tear on electrons.
written by pete, August 17, 2010 10:35
Econ 101: Low cost business (Fannie/Freddie borrowing at Treasury rates + a frog's hair) can dominate an industry. After their "tough" scrutiny in the early 2000s, constant harassment by the WSJ, and narrowly escaping tightened Republican sponsored oversight (what, pro regulatory Republicans???) thanks to Frank'nDodd, they felt it best to encourage lower income mortgages, so got into subprime directly and indirectly through purchasing securitized products...no bout a doubt it, the federal management of lower income housing, through the CRA changes in the Clinton years, to the Fannie Freddie accounting gimmicks in the later part of 90s, early 2000s, and finally the mid 2000s push into the subprime, caused the housing price expansion and crash. Trying to say things started with Bush v. Gore is insane. The asset inflation(s) began in 1996, the housing was perhaps worse than the NASDAQ, in total value, not percent, but part of the same deal, thanks in great part to Fannie and Freddie and their buddies Frank 'n' Dodd. Look at their balance sheets from 96 onward...tremendous growth, no registration of securities, no capital requirements....this ex post defending them is unbelievably revisionist.
NPR Believes Everything It Hears
written by kharris, August 17, 2010 1:19
As a long-time NPR listener, I can assure you that NPR reporters routinely claim that people believe whatever they claim to believe. It is one of the most common bits of nonsense one hears on NPR. That is, however, not a special case. Though NPR's news and feature efforts are far more intelligent that the norm, standards are still pretty low when it comes to delivery. One routinely hears mispronunciation on NPR. Lobbyists and commercial interests are often given generous air-time without being challenged by NPR's reporters or hosts, or matched up with opposing views. He-said/she-said isn't true balance, but neither is he-said and now a word from our sponsor. Is it possible to be shockingly bland?
written by kharris, August 17, 2010 1:41
In response to pete, well, nonsense.

Look, the assertion that CRA and the GSEs were the cause of the mortgage bubble has been refuted many times. The GSE's lost market share to private lenders. Sub-prime originated and florished outside the GSEs. CRA oversight did not encourage low-doc and liar loans. It certainly didn't have anything to do with Alt-A and prime jumbo lending, both of which were disastrous at the top.

pete repeats assertions that have been refuted, without even trying to address those refutations. Just repeating the talking points from the right ain't good enough.

The honest truth is that Democrats did discourage oversight of the GSEs, but the GSEs weren't the cause of the sub-prime or any other bubble. There is plenty of blame to go around without lying about what happened.
written by pete, August 17, 2010 9:41
please please do not consider me in the "right"...this is really about getting it together...labels are so liberating I guess, but really not helpful...just take some time and think about this stuff, really....don't take arbitrary starting points like 1/20/2001...a more holistic approach is needed...not simply R & D as Obama is preaching
44% of the subprime market is simply not insignificant
written by pete, August 18, 2010 11:53
written by Name, August 19, 2010 12:24
From your link, Pete:

"In 2003, the two bought $81 billion in subprime securities. In 2004, they purchased $175 billion -- 44 percent of the market. In 2005, they bought $169 billion, or 33 percent. In 2006, they cut back to $90 billion, or 20 percent. Generally, Freddie purchased more than Fannie and relied more heavily on the securities to meet goals."

More here

written by air max, August 24, 2010 9:42
air max 95.

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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.