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Private Sector Sparked Subprime Crisis: Fed

Liberal housing policy wasn't at fault—risky betting was

By Gabriel Winant,  Newser User

Posted Oct 12, 2008 9:12 PM CDT
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(Newser) – A talk radio campaign blaming the credit crisis on lower-class Americans is up against new federal data, McClatchy reports. Critics argue that government-backed Fannie Mae and Freddie Mac, pushed by Clinton policies, gave subprime mortgages to minority Americans who could not afford homes. But 84% of mortgages were handed out by the private sector, the Fed says.

Only a small fraction of subprime mortgages were given to low- and moderate-income Americans. And Fannie and Freddie don't hand out loans—they buy loans from private lenders. The "turmoil in financial markets clearly was triggered by a dramatic weakening of underwriting standards for U.S. subprime mortgages," the President's Working Group on Financial Markets said.

A customer leaves a branch of Chase Bank on Wednesday, Jan. 16, 2008 in New York.
A customer leaves a branch of Chase Bank on Wednesday, Jan. 16, 2008 in New York.   (AP Photo/Mark Lennihan)
Fannie Mae and Freddie Mac executives talk on Capitol Hill in Washington.
Fannie Mae and Freddie Mac executives talk on Capitol Hill in Washington.   (AP Photo)
In this May 9, 2008 file photo, a foreclosure sign stands outside an existing home on the market in Denver.
In this May 9, 2008 file photo, a foreclosure sign stands outside an existing home on the market in Denver.   (AP Photo/David Zalubowski, file)
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Credit crash is Dems' fault
National Review

 
Freddie Mac • Fannie Mae • subprime crisis

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