But even more so, in this post, I just want to be sure I understand you, because I think you may have inadvertently got this statement backwards, and I bring it up because it is a key one (heck, the longest part of the title of the book)
You said in your post:
"Anyone who blames Ambition, Greed and Corruption” on the failure of a system..." is incorrect, in my opinion. Your statement should say:
"Anyone who blames the failure of a system on Ambition, Greed and Corruption..." I think it is wrong because your first statement says that the faults of Ambition, Greed and Corruption HAPPENED because the failure of a system occurred. And that is CLEARLY not the case presented by the authors.
In the second case (My rewording, to correctly reflect the authors of the book) is undeniably and unequivocally true. It is CLEAR that Ambitition, Greed and Corruption can and have destroyed many, MANY entities. More than you and I can count, and as far back as these characteristics have been attributable to men.
Fannie Mae was buying up mortgages before 1995, and this was indeed one of the prime functions of Fannie Mae, to allow mortgages be obtained by people who couldn't get them through "traditional" means (originally intended for farmers and other people whose lack of steady income made it difficult to get them loans.) Fannie Mae would BUY these loans with the full support of the US government behind them.
Then,beginning in the early to mid-nineties (and Fannie Mae WAS delivering sub-prime mortgages to "non-traditional" (read "minority or other who could not repay) at that time as part of the "Trillion Dollar Targeted Mortgage Financing" trumpeted by Fannie Mae in 1994
The REAL explosive part here was that FANNIE MAE was a FULLY BACKED GOVERNMENT ENTITY that was seen by ALL investment houses as COMPLETELY SAFE. They were FULLY BACKED by the FULL WEIGHT of the US Treasury. You lend money to a dead cat in the middle of the road, sell loan to Fannie Mae, who then, with the backing and support of places like Standard and Poors (who were in bed with them) Fannie Mae would bundle those dead cat loans into un-openable securities (to make it impossible for investors to look at the guts of the bundle) and sell them as investments to people who took them at their word, because after all, who is safer than someone backed 100% by the power of the US Treasury?
This is not the only book I have read on this, I have read five or six others, and they dovetail appropriately.
If you haven't read the book, you should refrain from condemning it so quickly. I would suggest you read it. It is not in any way a hit piece on Republicans, but neither does it exclude them because they are Republicans, which is as it should be. It is clear the issue is a liberal issue in both its genesis and largely execution.
You are correct: I wrote, “”Anyone who blames Ambition, Greed and Corruption” on the failure of a system...”” when what I meant was “Anyone who blames Ambition, Greed and Corruption” FOR the failure of a system...”
Fannie Mae absolutely for decades bought up mortgages. THAT’S not what created the housing collapse, though. In fact, it probably minimized the Savings and Loans crisis of 1991: the S&Ls had fewer bad loans, and a larger entity, more capable of dealing with the blows took those blows.
Fannie Mae functioned to minimize the effect of any of a number of loans taking down a smaller financial institution. We can debate whether that is a proper role for a government agency, or a government-supported private agency. But what killed it was the sheer volume of defaulting loans, caused by regulations which required banks to make bad loans.
“The REAL explosive part here was that FANNIE MAE was a FULLY BACKED GOVERNMENT ENTITY that was seen by ALL investment houses as COMPLETELY SAFE. They were FULLY BACKED by the FULL WEIGHT of the US Treasury.”
There was no legal requirement for the American taxpayer to backstop Fannie and Freddie. It was an “implied” guarantee, meaning we were not required to honor it and the two GSEs could have been allowed to fail. It was Dubya and his cronies who decided we had to foot the bill to save the GSEs.
” You lend money to a dead cat in the middle of the road, sell loan to Fannie Mae,”
Fannie and Freddie dealt bought only low risk conforming paper, even when it was subprime. The non-conforming paper, the NINJA loans, No Docs, OptionARMs, the high-risk high-yield paper was issued and bundled by private sector rivals to Fannie and Freddie.
The F&F bubble loans have failed at around 6% which is close to its historic level. The non-conforming private market paper has failed at triple that rate.