Comment on Friedman Article

204.
November 26, 2008 9:54 am
Link
A lot of people, like the first poster, want to put the onus on the home buyers. Others point their finger at Fannie Mae, Freddie Mac, Frank and Dodds.The home owners were not acting out of greed. They wanted a home and the stability that comes with ownership.Fannie, Freddie (F&F) and the congressmen were using a capitalist system not out of greed but for the betterment of the country.When one takes the time to dig through the data, and I am surprised no one at the Times has done a through job on this, you find a different story. The closest the NYT did on the subject was the article/interview with the CEO of Fannie, Mr. Mudd.Take sub-prime mortgages and the secondary mortgage market. When I look up F&F's sub-prime exposure I find the number $58 billion. When I check on investment bank exposure I get various numbers, no one seems to know exactly, but the most common is around $1.5 trillion. That is 25 times the F&F exposure. More research shows that F&F were not that involve to any significant extent until after 2002. By 2004 they were fighting for their very existance in the secondary mortgage market as the investment banks were taking it over (see the Mudd article). By 2005 the investment bankers had and they did it through sub-prime mortgages, directly and indirectly.I place the onus on investment bankers who sought out the junk and created the market for it and those who did the bogus rating of their bonds. If there was any justice at all those in managment of those entities from 2000 to 2006 would be stripped of every penny and posession they own and their companies forfitted to the government. That would include Henry Paulson
— tim, iowa city