My conservative friends are convinced that this economic mess is the result of changes to Fannie and Freddie’s lending policies forced on them by the Democrats.
Question/Comment: My conservative friends are convinced that this economic mess is the result of changes to Fannie and Freddie’s lending policies forced on them by the Democrats.
My own theory identifies our chronic balance of payments as the chief culprit. There is a world oversupply of dollars looking for a safe place to make a buck. Rather than invest those dollars in their own countries they come to the U.S. looking for safe but rewarding investments instead of goods. Some slick operators married the American dream of a home, mixed in additional shady mortgage lenders, added overly creative investment bankers, plus too anxious investors and gave us the an economic disaster. Like Wiley Coyote we finally looked down and found no one really knew what was there and we and we started to fall hoping the government could give us a soft landing.
Do either of these explanations make any sense?
Paul Solman: Perfect sense. And pretty much what I’ve been writing here for months, as well as reporting on the NewsHour well over a year ago.
Yes, they contributed to the problem but so did the Republicans, who have been pushing home ownership for the poor for decades. The key statistic: Fannie and Freddie’s share of the subprime market went DOWN in the 2000’s. They were playing catch-up, not leading the charge.