Causing the housing bubble? Fannie and Freddie have an airtight alibi

[Kurt_and_Hunter]

RW types insist that Fannie and Freddie caused the housing collapse. This allows them to implicate government and people of modest means for a series of crimes and follies perpetrated by the well-to-do.

A key problem in the bogus "poor responsible for housing bubble" narrative is that the key feature of the housing bubble (2004-2007) is private entities taking over the Fannie/Freddie/Ginnie share of the market. The government chartered agencies were innocent bystanders playing an unusually small role in the market..

The grey area on this chart is Private MBS issuance. Went from very little right before the bubble to the majority of the market. Then when the bubble burst, disappeared almost entirely.



Chart from:

http://krugman.blogs.nytimes.com/2010/09/20/fannie-and-freddie-again/