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View Full Version : Really dumb to Blame Fannie,Freddie, Barney, CRA



Gayle in MD
10-07-2010, 01:19 PM
<span style='font-size: 14pt'>June 3, 2010, 4:35 am
Things Everyone In Chicago Knows
Which happen not to be true.

It was deeply depressing to see Raguram Rajan write this:

The tsunami of money directed by a US Congress, worried about growing income inequality, towards expanding low income housing, joined with the flood of foreign capital inflows to remove any discipline on home loans.

Thatís a claim that has been refuted over and over again. But what happens, I believe, is that in Chicago they donít listen at all to what the unbelievers say and write; and so the fact that those libruls in Congress caused the bubble is just part of what everyone knows, even though itís not true.

Just to repeat the basic facts here:

1. The Community Reinvestment Act of 1977 was irrelevant to the subprime boom, which was overwhelmingly driven by loan originators not subject to the Act.

2. The housing bubble reached its point of maximum inflation in the middle years of the naughties:

Robert Shiller
3. During those same years, Fannie and Freddie were sidelined by Congressional pressure, and saw a sharp drop in their share of securitization:

FCIC
while securitization by private players surged:

FCIC
Of course, I imagine that this post, like everything else, will fail to penetrate the cone of silence. Itís convenient to believe that somehow, this is all Barney Frankís fault; and so that belief will continue.</span>


Excellent charts here:

http://krugman.blogs.nytimes.com/2010/06/03/things-everyone-in-chicago-knows/

LWW
10-08-2010, 02:57 AM
Did you see Barney on Fox yesterday admitting he was wrong in defending F/F?

Of course not ... you aren't allowed to warch such things.

It was a blatant effort to con the naive and save his miserable hide.

LWW