I was wondering how long it would take for some smartie pants to state the obvious…or at least wonder out loud…could it be possible that Fannie Mae and Freddie Mac, in their zeal for profits, actually drove us into the housing bubble and the subsequent economic meltdown?
The questions are beginning to mount. F & F’s relentless drive to purchase mortgages (in order to fatten their bottom lines) might have incented mortgage lenders to make loans they should not have made. Over the last decade, the activities of these free-wheeling, voracious, government-backed entities may have overindulged the home mortgage sector, driving too much capital into it and eventually leading us to the inevitable deflation of the housing bubble.
Well, our intrepid and discerning friends over at the Heritage Foundation have been addressing this very real possibility for awhile and here is their latest salvo. After all, when you subsidize something to that extent, you will see excessive growth in that sector (ethanol subsidies have driven the agriculture sector to overplant corn in order to cash in on the subsidies, etc.).
And now the government is going to reach in and salvage the very entities which were allowed to drive the housing bubble in the first place? We have yet to see any serious calls in Congress for the repeal or the reform of the GSEs’ congressional charters, which are the root of both their power and their unchecked growth.
Filed under: Pork
