Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis. Subprime lending offered high-cost loans to the weakest borrowers during the housing boom that lasted from 2001 to 2007. Subprime lending was at its height from 2004 to 2006. Federal Reserve Board data show that:
* More than 84 percent of the subprime mortgages in 2006 were issued by private lending institutions.
* Private firms made nearly 83 percent of the subprime loans to low- and moderate-income borrowers that year.
* Only one of the top 25 subprime lenders in 2006 was directly subject to the housing law that's being lambasted by conservative critics. The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages, beginning in late 2004 and extending into 2007," the President's Working Group on Financial Markets reported Friday.
Wow, that looks damaging doesn't it. Then we grab a more important piece from the SAME article:
Fannie, the Federal National Mortgage Association, and Freddie, the Federal Home Loan Mortgage Corp., don't lend money, to minorities or anyone else, however. They purchase loans from the private lenders who actually underwrite the loans. It's a process called securitization, and by passing on the loans, banks have more capital on hand so they can lend even more. This much is true. In an effort to promote affordable home ownership for minorities and rural whites, the Department of Housing and Urban Development set targets for Fannie and Freddie in 1992 to purchase low-income loans for sale into the secondary market that eventually reached this number: 52 percent of loans given to low-to moderate-income families.
So, of course, they want to blame deregulation, but what they fail to mention is that Fannie and Freddie bought up the risky loans from Private Issuers like hot-cakes, and investors bought the mortgage back securities that they issued. Why would they do that? Oh yeah, Fannie and Freddie were GSE's and the implicit Uncle Sam guarantee allowed them to write checks that couldn't be cashed.
Sure, they can say it is racist to blame ACORN, Fannie or Freddie, just because they say it doesn't mean it is true. The fact is, Government intervention in free markets caused this issue, plain and simple. The idea that every American can own a home caused this issue. With Obama spouting that we need to spread the wealth around, it seems to me we'll get more of this meddling in the future - Karl Marx style.
In Response To: McClatchy Debunks Latest Conservative, Racist Pack of Lies