The Disgruntled Republican in Nashville: update: Goodbye Barney Frank comic book

Wednesday, December 07, 2011

update: Goodbye Barney Frank comic book

1 comment:

RobertDecember 10, 2011 at 11:41 PM
I am not sure why these comics seem to imply that Rep Frank and Fannie Mae/Freddie Mac were somehow responsible for the housing/mortgage crisis and the resultant blow to the economy.

Many reviews have been published that completely refute that allegation....with actual facts and data!

http://www.ritholtz.com/blog/2011/11/examining-the-big-lie-how-the-facts-of-the-economic-crisis-stack-up/
Summary:
•The boom and bust was global.
•Nonbank mortgage underwriting exploded from 2001 to 2007, along with the private label securitization market, which eclipsed Fannie and Freddie during the boom.
•Private lenders not subject to congressional regulations collapsed lending standards.

http://rortybomb.wordpress.com/2011/11/01/bloombergs-awful-comment-what-can-we-say-for-certain-regarding-the-gses/

Parallel bubble-bust cycles occurred outside of the residential housing markets (for example, in commercial real estate and consumer credit).
Parallel financial crises struck other countries, which did not have analogous affordable housing policies.
The U.S. government’s market share of home mortgages was actually declining precipitously during the housing bubble of the 2000s.

http://www.mcclatchydc.com/2008/10/12/53802/private-sector-loans-not-fannie.html
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.

To be sure, encouraging lower-income Americans to become homeowners gave unsophisticated borrowers and unscrupulous lenders and mortgage brokers more chances to turn dreams of homeownership in nightmares.

But these loans, and those to low- and moderate-income families represent a small portion of overall lending. And at the height of the housing boom in 2005 and 2006, Republicans and their party's standard bearer, President Bush, didn't criticize any sort of lending, frequently boasting that they were presiding over the highest-ever rates of U.S. homeownership.

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.

I guess the cartoonists are more interested in pushing some talking points than in actually satirizing politics and current events?
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