Um, Floradora, you may want to do a tad bit more research rather than regurgitating “Fannie/Freddie caused it all!” ((insert dramatic pose here))
A whole lotta folks were involved in the downfall of our economy; Fannie/Freddie came in much later. Of course, being a fervent whiner of the “F/F!”, you could never concede that Dems/Repubs were all complicit in the crises. To include the fact that no one was really listening when warning bells were going off.
So, yeah, Floradora, I *can* honestly say that your allegation is false. Below are two separate “lists” with the same themes: whole lotta players involved in our economic downfall.
Here’s one list from Factcheck.org:
The Federal Reserve, which slashed interest rates after the dot-com bubble burst, making credit cheap.
Home buyers, who took advantage of easy credit to bid up the prices of homes excessively.
Congress, which continues to support a mortgage tax deduction that gives consumers a tax incentive to buy more expensive houses.
Real estate agents, most of whom work for the sellers rather than the buyers and who earned higher commissions from selling more expensive homes.
The Clinton administration, which pushed for less stringent credit and downpayment requirements for working- and middle-class families.
Mortgage brokers, who offered less-credit-worthy home buyers subprime, adjustable rate loans with low initial payments, but exploding interest rates.
Former Federal Reserve chairman Alan Greenspan, who in 2004, near the peak of the housing bubble, encouraged Americans to take out adjustable rate mortgages.
Wall Street firms, who paid too little attention to the quality of the risky loans that they bundled into Mortgage Backed Securities (MBS), and issued bonds using those securities as collateral.
The Bush administration, which failed to provide needed government oversight of the increasingly dicey mortgage-backed securities market.
An obscure accounting rule called mark-to-market, which can have the paradoxical result of making assets be worth less on paper than they are in reality during times of panic.
Collective delusion, or a belief on the part of all parties that home prices would keep rising forever, no matter how high or how fast they had already gone up.
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Here’s another list from http://www.rgemonitor.com/financemarkets-monitor/254030/the_us_financial_crisis_a_misunderstanding_of_the_top_causes
Imprecise regulatory law allowed the financial institutions to carry too high a ratio of mortgage-backed securities to collateralized debt.
Banking regulators should have screamed louder earlier regarding the ratio of assets to debt! Although there are many documented attempts from specific people that did warn of this problem it was more a whisper than a scream.
New accounting regulations under Sarbanes Oxley (regulation passed after Enron) are too conservative causing assets like mortgage-related securities to be valued less than their economic value (true worth), which caused the bank debtor run on the bank.
Private lenders (and their CEOs) got greedy either lowering or violating their own lending standards in hopes of making more interest income by loaning to people who were very risk bets.
Households borrowed more than they could afford. Citizens that borrowed need to share the blame with lenders, although I place lenders at a higher standard than borrowers.
New law had been passed several years ago, urging institutions like Fannie Mae to make more loans to lower income households that carried much more risk.
