Re:Senator Dodd Reform Bill Could Ruin Angel Investing
by hristov on Thursday April 29, 2010 @05:12PM
(#1306076)
Freddie and Fannie did absolutely nothing to fuel the subprime mess. They were not allowed to invest in any subprime mortgages during the bubble and were later forced by law to invest in them when the crash was already happening, because that was Bush's plan to stop the crisis. This is just an excuse that people that caused the sub-prime mess use.
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Re:Senator Dodd Reform Bill Could Ruin Angel Investing
by dagheti on Thursday April 29, 2010 @05:42PM
(#1306167)
What is the source of this? If you look at http://en.wikipedia.org/wiki/Subprime_crisis_impact_timeline and search for subprime you'll see many cases of Freddie and Fannie buying or guaranteeing subprime activity.
- In 2000 Fannie buys $600 million, and Freddie buys $18.6 billion, and guarantees 7.7 billion more. - 2002-2006 the GSE's buy 38-90 billion a year in subprime mortagages
As far back as 1999 you can find stories stating that Fannie was being pressured into subprime:
http://www.nytimes.com/1999/09/30/business/fannie-mae-eases-...
Their activity appears smaller than the market at large, but it's not non-existant. It doesn't seem on face value that they were not allowed to invest. Is there some rule I am missing?
Re:Senator Dodd Reform Bill Could Ruin Angel Investing
by hristov on Thursday April 29, 2010 @06:19PM
(#1306285)
It seems I was wrong about that. But still their activity was just a small part of the market at large and they only bought the safest tranches. Saying they were responsible for the mess is just wrong, imo.
Re:Senator Dodd Reform Bill Could Ruin Angel Investing
by cynicalkane on Thursday April 29, 2010 @05:53PM
(#1306197)
One, they did buy subprime mortgages; two, they've lost hundreds of billions of taxpayer dollars so far (and will lose more) paying for their distortions of their mortgage market. Hundreds of billions of dollars burned, lost, destroyed fueling housing demand, and you think that had nothing to do with the subprime crisis?
Re:Senator Dodd Reform Bill Could Ruin Angel Investing
by steveplace on Thursday April 29, 2010 @06:38PM
(#1306351)
If you didn't have GSEs in the market, interest rates on mortgages would have been higher. That is the role they played, but it was quite small on a relative scale.