Today's Political Interruption
A Bad Move from the New York Times...

Richard Green Smacks Down the John McCain-George Bush Claim That Big Government--Fannie and Freddie Got Us into This Mess

He writes, and deploys a graph:

Richard's Real Estate and Urban Economics Blog: Charles Calomiris and Peter Wallison blame Fannie Mae for the Subprime Mess: Hmmmm. The loan performance on Fannie's book of business is substantially better than the overall mortgage market. And starting in 2002, Fannie Freddie (pink line) lost market share to ABS (light blue line).

MDO_By_Holder(1)(1).jpg (image)

The data underlying the graph is from the Federal Reserve, Table 1173. Mortgage Debt Outstanding by Type of Property and Holder.

I agree. Fannie and Freddie did bad things and followed the market down in lending standards--calling a mortgage "conforming" if it had a 5% downpayment and a 15% mortgage-insurance policy purchased from a fly-by-night or AIG--but they did not lead the market down--it was Wall Street securitizers and their partners who did that.