Are you referring to wealth loss beginning with the Bear Stearns crash on up to today ?
Fannie & Freddie, both government entities as you know, offered mortgages to individuals that the private institutions wouldn't, doesn't that tell you something ?
That's not how the mortgage market works. FNMA and FHLMC set guidelines and standards. Neither "offers" mortgages. Private institutions offered the mortgages in question. Their mortgage officers initiated the mortgages in question. Their processors assembled the verifications and other paperwork on the mortgages in question. Their underwriters approved the mortgages in question - supposedly to FNMA or FHLMC guidelines. But often there was little more than an empty loan packet with a signature on an application. And, according to a Federal Reserve study, roughly 60% of the mortgages issued under the subprime category were to people who actually qualified for prime mortgages.
FNMA and FHLMC did have a large part in the financial collapse, but not because they issued mortgages or because they "forced" banks to issue mortgages to people who couldn't pay the money back (as someone else here falsely claimed). FNMA and FHLMC helped make a market for the subprimes, and took part in a fraud to cover up the losses.
Banks and mortgage companies were eager to issue subprimes because the fees on subprimes could be 500% greater than the fees on prime conventionals. And as long as they could package them and sell them off to suckers... I mean,
investors, everything was cool. And then... the music stopped.
The problem was not too much government regulation, it was too little (and too lax) government regulation.
And today, the GOP (Corker) seems ready to lay down on the railroad tracks to make sure the Dems don't rough up the poor, unfortunate bankers too badly.
I have little use for Chris "Credit Card" Dodd either. But the GOP is anything BUT innocent when the story of the Great Recession is written.
