Monday, May 09, 2011

Countrywide, Fannie, and Burst Bubbles

A very brief article with two very significant facts.

The (D) Party loves to assign blame for "the deficits" to GWBush.

Too bad that Pew found otherwise:

...Analyzing all CBO reports from January 2001 to today, Pew found that the Bush tax cuts are only to blame for 13% of the shift from surplus to debt. Afghanistan and Iraq combined totaled only 10%. To put that in perspective, Obama’s stimulus alone is responsible for 6% of that shift.

So what DID cause "the deficits"?

The biggest driver of today’s deficits? Technical and Economic revisions … which is CBO’s way of saying the tech and housing bubbles burst.

As to the Fannie Mae problem:

Countrywide tends to follow the most flexible underwriting criteria permitted under GSE and FHA guidelines. Because Fannie Mae and Freddie Mac tend to give their best lenders access to the most flexible underwriting criteria, Countrywide benefits from its status as one of the largest originators of mortgage loans and one of the largest participants in the GSE programs...FNMA report, 2000

Look again at the date of that FNMA report. That was before GWB's bunch had any impact at all on Fannie's mortgage-buying activity. It was Clinton--and Barney Frank--who wrote those rules.

That's the same FannieMae, by the way, which has lost $100 BILLION in the last few years.

And finally, for the terminally confused: Countywide is NOT a bank. It's a broker--or it was a broker, until they were forced to sell themselves to a bank.

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