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Old 09-10-2012, 12:08 AM   #248
KC native KC native is offline
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Join Date: Feb 2009
Location: Fort Worth, TX
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Quote:
Originally Posted by AustinChief View Post
I won't rehash this argument with you.. but your facts are simply wrong or at the least a big fat INCOMPLETE. I'll agree that Greenspan's monetary policy and a myriad of other factors including the Gramm–Leach–Bliley Act played a part as well... but you're blind defense of Fannie and Freddie is based on.. well, nothing. You don't know the Fannie or Freddie figures because they consistently distorted them... which is why they are currently being sued by the SEC.
Please point out where I've said anything incorrect or incomplete when it comes to Fannie and Freddie. You are wrong on this.

Greenspan's ultra low rates for an unreasonable time simply due to asset prices falling (the tech bubble) is by far the biggest driver in the financial crisis.

Next was the Gramm Leach Bliley Act. Not only did it repeal Glass Steagall and clear the way for megamergers, but it also exempted derivatives from oversight. The CDS and CDOs were exclusively carved out to be separate and exempt. The CDS and CDOs were written under faulty models so when those actually came do, companies like AIG went bankrupt. They viewed the CDS money as basically free money because they couldn't fathom that they would have to pay out.

Those are your two prime drivers. Fannie and Freddie didn't even get into buying and guaranteeing subprime stuff until 2006. The only reason they moved into that area is because of their profit motive. They were losing market share so in a short sighted "Let's pump up the bottom line" decision they got into subprime.

Fannie and Freddie's accounting scandals have nothing to do with the financial crisis. This is a red herring.
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