Memo to clueless debate moderators: Private sector loans, not Fannie or Freddie, triggered crisis

[flpoljunkie]

The moderators for the Bloomberg debate last night sat there and let Michele Bachmann and then New Gingrich spew their 'Fannie and Freddie' lies while also blaming the Community Reinvestment Act for the housing crisis. Both not true. And, now Joe Scarborough is repeating the lie this morning--saying that Barnie Frank and Christopher Dodd deserve blame for the housing crisis. They had just played the Gingrich clip from last night's debate saying the two should go to jail. Totally absurd. (Emphasis mine)

Sun, Oct. 12, 2008

Private sector loans, not Fannie or Freddie, triggered crisis

David Goldstein and Kevin G. Hall
McClatchy Newspapers

last updated: November 24, 2010 01:49:33 PM

Commentators say that's what triggered the stock market meltdown and the freeze on credit. They've specifically targeted the mortgage finance giants Fannie Mae and Freddie Mac, which the federal government seized on Sept. 6, contending that lending to poor and minority Americans caused Fannie's and Freddie's financial problems.

Federal housing data reveal that the charges aren't true, and that the private sector, not the government or government-backed companies, was behind the soaring subprime lending at the core of the crisis.

Conservative critics also blame the subprime lending mess on the Community Reinvestment Act, a 31-year-old law aimed at freeing credit for underserved neighborhoods.

Congress created the CRA in 1977 to reverse years of redlining and other restrictive banking practices that locked the poor, and especially minorities, out of homeownership and the tax breaks and wealth creation it affords. The CRA requires federally regulated and insured financial institutions to show that they're lending and investing in their communities.

Conservative columnist Charles Krauthammer wrote recently that while the goal of the CRA was admirable, "it led to tremendous pressure on Fannie Mae and Freddie Mac — who in turn pressured banks and other lenders — to extend mortgages to people who were borrowing over their heads. That's called subprime lending. It lies at the root of our current calamity."

Fannie and Freddie, however, didn't pressure lenders to sell them more loans; they struggled to keep pace with their private sector competitors. In fact, their regulator, the Office of Federal Housing Enterprise Oversight, imposed new restrictions in 2006 that led to Fannie and Freddie losing even more market share in the booming subprime market.

more...

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

[SpiralHawk]

1. But but but...Republicons need to FRAME issues with lies

or they would be unable to propose their Future FAIL strategeries.

[flpoljunkie]

2. But if we had journalists worth a damn, they would not get away with it

[PA Democrat]

3. You can always tell if someone relies on FOX "News"

for their information if they spout "Freddie and Fannie" as soon as the mortgage meltdown is mentioned. Ask them about credit default swaps and all you get is a blank stare.

FOX "News" will make you stupid.