October 12th, 2008

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Clinton administration proven not responsible for mortgage crisis.

Despite charges by conservative critics that the failures of Fannie Mae and Freddie Mac are due to the Clinton administration's push to make home mortgages available to lower income families, the President's Working Group on Financial Markets has found that the failures could only be due to the private sector, not the government.  The main reason is that Fannie Mae and Freddie Mac do not actually make loans, so there's no way they could have done what they're accused of.  They buy existing loans from private lenders, and very few of those lenders were subject to the housing law that mandated low income lending.  The private lenders gave loans by choice to people who were unlikely to pay them back, and passed them off to the FMs who bought them in good faith, expecting such respected big lenders were responsible enough to make sure they weren't junk.

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