11-21-2008, 03:49 AM
Just gotta square this last post away before I sleep.
Nevertheless, Fannie and Freddie didn't have to get into the market in the way they did. The fact of the matter is that if Fannie and Freddie hadn't bought the crappy mortgages, the banks that were making them would:
A. Have to stop making them because they didn't have a buyer
B. If they continued to make them, when the market collapsed the problem would have been localized
You state that the loans traveled to China. This is true, and it shouldn't have happened. It did, however, because Freddie and Fannie packaged the bad loans into mortgage-backed securities (just in on the rumor line: apparently, they sometimes packaged the same mortgage more than once) and sold them off China. If Fannie and Freddie hadn't gotten into the market, we wouldn't be having this problem.
Nevertheless, Fannie and Freddie didn't have to get into the market in the way they did. The fact of the matter is that if Fannie and Freddie hadn't bought the crappy mortgages, the banks that were making them would:
A. Have to stop making them because they didn't have a buyer
B. If they continued to make them, when the market collapsed the problem would have been localized
You state that the loans traveled to China. This is true, and it shouldn't have happened. It did, however, because Freddie and Fannie packaged the bad loans into mortgage-backed securities (just in on the rumor line: apparently, they sometimes packaged the same mortgage more than once) and sold them off China. If Fannie and Freddie hadn't gotten into the market, we wouldn't be having this problem.