Curse you and your blasted facts! Can’t you tell they’re trying to spread a meme, here?!?

Fannie was created by FDR and Freddie was created in the early 1970s. On the other hand, CRA wasn’t passed until the Carter Administration. Thats pretty amazing that FDR had the foresight to create an institution 40 years before the law was created.

So there was little if any incentive for a lender not subject to CRA to eschew risky loans they knew they could sell anyway.

The originating institution was still on the hook for losses on bad loans.

First off, Freddie/Fannie weren’t “exempt from the CRA,” they were the instrument by which CRA was implemented. Without them buying up and bundling the risky mortgages, none of this would have been possible.

not

Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble.

Institutions were encouraged to make risky loans by policies set by Congress and pushed especially by Barney Frank, Maxine Waters and other Democrats. Gresham’s Law ensued and bad loans pushed out good ones. Black? White? Don’t make me laugh. Foolishness hasn’t got a skin color, though I wonder if perhaps this flavor of it favors one particular political party.

Banks and other lenders were not previously failin’ to make risky loans ‘cos they were tryin’ to keep a brutha down (heck, when I was a bad risk, I could not even get a loan to get a better car, and I look as white as you), they were wantin’ to make sure they’d get their money back plus some profit for havin’ it tied up for several years. Worse risk were havin’ to pay more for the use of the money, if they could get loans at all, to help pad against the liklihood of default. The lender does not want your car or your house; they are in the money biz.

And Congress is in the unicorns that crap money biz. Turns out they were wrong and they’ll pick our pockets to try to correct it while they and their pals at Fannie mae and Freddie Mac go laughing off to the bank — probably in the Bahamas or Switzerland.

Sorry to disturb your echo chamber. (Actually, I’m not.)

EC:

That’s the beauty of freedom, isn’t it? You’re free to not read. That said, if you read the linked Slate piece, race is really mentioned only in passing, and certainly with nothing like the snark that publius introduced (at least not on that subject).

First off, Freddie/Fannie weren’t “exempt from the CRA,” they were the instrument by which CRA was implemented. Without them buying up and bundling the risky mortgages, none of this would have been possible. They made it possible for banks to make loans that were simultaneously risky and low interest. Freddy and Fanny then then sold those mortgages for full price as if they were not risky. The entire market proceded as if this were true and the risk were virtually non-existant- this is how we ended up with stuff like CDSes with no money backing them.

The problem was that there was no way to “lend to minorities” without collapsing the standards for the entire industry. This happened and pretty much everyone piled on to get at the free money. 10 years later, here we were. Give the market shitty rules to follow and the market will produce shitty results.

“The investment banks, Fannie, Freddie, AIG, Countrywide and Ameriquest were not covered by CRA. Of the 3 big institutions that failed (WaMu, Wachovia and IndyMac), only IndyMac is costing the taxpayer anything. Both WaMu and Wachovia were bought by institutions willing to cover their losses.”

Disingenuous at best, and outright deception at worst.

The purpose Fannie/Freddie was to purchase the mortgages forced on banks by the -CRA-.

Get it now?

These yahoos, in typical liberal fashion, used political correct affirmative action to sub prime loans. Thus, telling the banks to give loans to minorities or low income whites,who could not afford the homes they were getting loans for. Sure, we could also blame the home buyers, but most of them were government cheese, thus few had the ability to think for themselves in the first place.

The investment banks, Fannie, Freddie, AIG, Countrywide and Ameriquest were not covered by CRA. Of the 3 big institutions that failed (WaMu, Wachovia and IndyMac), only IndyMac is costing the taxpayer anything. Both WaMu and Wachovia were bought by institutions willing to cover their losses.

On the other hand, the acquirers, Bank of America, Chase and Wells Fargo, are all covered by CRA.