Arnold Kling has some quotable insights on the housing tragedy I found worth sharing:
“Old consensus: We need Freddie and Fannie in order to make housing “affordable.”
New consensus: We need them in order to “prevent further house price declines,” in other words, to make housing less affordable.”
[via Free Market Mojo]
Furthermore – Why did Fannie Mae and Freddie Mac fail? NY Times covered the political backdrop here:
“In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
Fannie Mae, the nation’s biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.”
Thank you Bill Clinton. Credits to Chip Hanlon – more here.