by Chet Hardin
If you can't win the ideological argument with facts, you can always just lie.
Ask many Americans who’s to blame for the nation’s economic mess, and two names come to mind: Fannie and Freddie.
They see Fannie Mae and Freddie Mac as the villains of the financial crisis.
GOP.gov, the official website for Republicans in the House of Representatives, says flatly: “Fannie Mae and Freddie Mac were the main cause of the nation’s current financial turmoil.” Many critics — including Republican appointees to the federal Financial Crisis Inquiry Commission — blame the two government-chartered mortgage underwriters for pushing lenders to make riskier loans and leading the way into the financial crash.
There’s a problem with this narrative: The numbers tell a different story.
What story do the numbers tell? According to the Center for Public Integrity's research of federal data, Fannie and Freddie were far from the leading culprits in plumping up the subprime market that would eventually crash the whole western world's economy. Fannie and Freddie were just tagging along behind Wall Street powerhouses like Lehman Brothers, trying to keep hold of some of the market share, writes Michael Hudson.
"Mortgages financed by Wall Street from 2001 to 2008 were 4½ times more likely to be seriously delinquent than mortgages backed by Fannie and Freddie ... just over 15 percent of Fannie- and Freddie-backed loans made in 2007 have been seriously delinquent, compared to nearly 42 percent of mortgages bankrolled by Wall Street, according to the FHFA."
A far different picture than the lie that the Republicans have been selling to their constituents since the meltdown.
When it comes to the lending spree that sparked the financial crisis, Fannie Mae and Freddie Mac were followers, not leaders. They were, at first, not-so-innocent semi-bystanders and, eventually, too-willing accomplices who followed Wall Street as it led the nation’s economy off a cliff.This lie is part of the GOP's pro-Wall Street attempt to undercut the 70-year-old government-sponsored enterprises and win support for dissolving the two entities.