Fannie Freddie Phooey

[n2doc]

July 14, 2011, 8:12 AM
Paul Krugman

Fannie Freddie Phooey

Over at The Big Picture, David Min has a terrific takedown of the claim that Fannie and Freddie caused the housing bubble. Every time you hear or read someone claiming that Fannie and Freddie were responsible for large amounts of subprime/risky lending, you should remember that this is based on essentially phony numbers: people at AEI invented their own definition of subprime, which isn’t the standard definition, and, more important, doesn’t work: the supposedly high-risk loans that F&F were making or buying were, demonstrably, not actually high-risk:



http://krugman.blogs.nytimes.com/2011/07/14/fannie-freddie-phooey/

[katanalori]

1. THANK YOU!

During the "bubble" years, Fannie and Freddie did approx. 40% of the loans and had underwriting criteria (income ratio, debt ratio, credit scores) - while Wall Street did approx. 60% of the loans with NO guidelines.