On 4/26/2012 6:02 AM, dgk wrote:

That's nonsense. They were forced to consider making loans, not just
turn people down because of their zip code. No one forced any loan to
be made if the numbers didn't add up. What did happen was wrapping up
mortgages into securities. Now the issuing bank didn't give a crap
about whether the loan made sense, they made their money up front and
got the ratings companies to give top ratings to crappy loans. Then
they sold them.

And of course Fannie and Freddie made far fewer bad loans than the banks
who were in a race to the bottom to make loans. Fannie and Freddie were
late to the sub-prime game. They got into riskier mortgages because they
were losing market share in what they saw as a highly profitable area.

It is true that back in 1999 the Clinton administration was urging that
standards for home loans be relaxed slightly, but they never required or
even requested anything like the total lack of qualifications that
caused the sub-prime mortgage crisis--that was pure greed by the banks
that knew there was little downside because if things went bad the
government would be forced to bail them out. Of course no one foresaw
what a mess W would make of things in just eight years.