Q: What role did Wall Street play?
A: For most of their history, Fannie and Freddie performed their role without problems, helping home ownership grow and freeing up banks to lend more. In the late 1990's, Wall Street began aggressively pooling mortgages into bonds — called private-label mortgage-backed securities.
After 2001, these Wall Street firms focused heavily on subprime loans given to the least creditworthy borrowers. In 1999, 81 percent of new U.S. mortgages were securitized by Fannie and Freddie. By 2005 and 2006, the final years of the housing bubble and the period most characterized by the deep erosion of lending standards, Wall Street firms were securitizing two out of every three new U.S. mortgages.
Sunday, February 6, 2011
McClatchy with the must read on Fannie/Freddie
It's a great piece, but I think this needs to be put on T-shirts or something and maybe kill a zombie lie: